GEORGE TOWN, Grand Cayman (CNS) -- A memo that was written more than six years ago about government’s failure to collect stamp duty on residential leases suggests that the public purse is missing out on at least a million dollars every year in revenue that government experts said should not be very expensive to collect.
Following a freedom of information request made in March by local attorney Peter Polack, the Lands and Survey Department released the memo from its former director to the financial secretary about the failure to collect on more than 8,000 leases.
The review, written in September 2009, concluded that, at the time, the leases in existence could generate well over a million dollars in revenue but the public purse was missing out due to a failure to collect.
As government plans to deliver its budget in just over a week’s time, there is no indication that the issue of rental lease stamp duty is being addressed in this latest plan, which will cover government revenue and expenditure for 18 months.
The 2009 proposal suggests that by introducing a fixed fee schedule into the existing law, the public purse could boost its coffers with little cost being spent on collection and no need to announce a new fee, as the duty is already a legal requirement.
Government at present collects only a fraction of the tax on residential leases it is owed and they come via lawyers who have a fiduciary duty to declare any fees owed.
With an estimated 8,000 residential rental leases in operation, even if the vast majority were to fall into the lower monthly rental category of $1,200 or below, government could collect more than $1 million. Some 6 and a half years on and with more work permits than ever – indicating more renters – and higher rents, the chances are that government could collect double that if it enforced the law.
Recommending that landlords be responsible for the collection and payment of the duty from tenants, the director at the time said it would create a single point of enforcement, making it easier to enforce existing legislation.