I am not an avid reader of the Guardian, but they have run a story concerning the potential bankruptcy of the Cayman government. It seems that the Cayman government spent a bit too much on infrastructure and as a result is currently running a deficit of $81m against a budget of $557m.
The government has asked for permission from the UK government to borrow $310m from local banks. The Guardian portrayed this as asking the UK government for a bail out, but it is patently nothing of the sort. As a a British overseas territory, the Cayman government requires UK government approval for such borrowings.
Chris Bryant, former Conservative, now Labour, Christian but gay, MP and junior mister who upheld the dignity of his office by soliciting for encounters clad only in his underpants, has written to the Cayman government telling them that perhaps they should consider raising taxes on the $2.3 trillion invested in hedge funds on the island.
The reality is that there is plenty of money available to finance the government, not least from the hedge funds to whom the $81m (CI$1.2 = US$1) is a trifling amount. Last week Moody’s Investors Services last month maintained its Aa3 rating, but of course the UK government is trying to break the Cayman Islands reputation as a low tax jurisdiction.
Mind you, as a former accountant, Mr Bryant knows a thing or two about dodgy financial dealing, having flipped his second-home expenses twice, claimed mortgage interest expenses that started at £7,800 per year before rising (after flipping) to £12,000 per year. Doing so allowed he managed to claimed £6,400 in stamp duty and other fees on his most recent house purchase, a sophisticated form of tax mitigation. He also passed £6,000 per year in service charges on to the tax payer. He wasn't always that successful because a claim that he made in 2004 for £58,493.26, almost three times the annual maximum, was disallowed.
To the Cayman Islanders, lectures from Britain over a 14% shortfall in government spending must come across a bit rich coming from a government whose own annual funding requirement is 28.5% of government spending, but it seems that sort of contradictory behaviour comes easily to the Labour, but once Conservative, Christian but gay, responsible but irresponsible minister, Chris Bryant.