The total imports will tell you how much how strong the economy is based upon areas that are being heavily taxed. This is because the non-direct taxation system, will tax imports and other items, as a way to raise revenues for the government. (McCann 2006, pp. 37 -- 53) By comparing this number with the information presented earlier, we can see the total effects of the non-direct taxation policy on the economy and the government. When you look at the total number of imports that were being received, it is clear that this figure is following a similar trend as the rest of the economy. With total imports coming in at: $881.6 million for 2007, $876.5 million for 2008 and $735.9 million for 2009. The below chart illustrates the overall declines that were seen with imports during this time. (Cayman Islands Annual Economic Report 2007) (Cayman Islands Annual Economic Report 2008) (Cayman Islands Annual Economic Report 2009)
This is significant, because it shows that regardless of the taxation system that is being utilized, the economy is still exposed to changes in the economic cycle.
To determine if this model is suitable for the Cayman Islands, we will compare the above numbers with the surpluses and deficits from figure 1.2. When you look at the information, it is clear that the non-direct tax model is helping, to increase the revenues that government is making dramatically. Evidence of this can seen, with the budget surpluses that the government has been experiencing since 1988. During two of those years (2001 and 2009), was when they ran a deficit. When you compare this with the large number of business that are registering...
Over the course of time, this will allow the government to increase their revenues, as the strong economy and the favorable tax structure are encouraging businesses to spend money. At the same time, this helps to increase imports, as these businesses will require increased amounts of supplies and materials. This allows the nation to experience above average growth, as the favorable tax policy is continually stimulating the economy.
Clearly, after conducting a statistical analysis of: the number of new businesses that are registering, the total amount of imports and the overall number of surpluses / deficits; it is obvious that the non-direct taxation policy is suitable for the Cayman Islands. This is because the favorable tax policy allows the country, to offer greater investment opportunities in comparison with other nations. This helps the economy to experience above average growth during times of economic expansion and it protects, against some of the negative effects of a recession. Where, this policy has allowed the government to experience consistent budget surpluses since 1988, with only two years of deficits (2001 and 2009). As a result, one can effectively argue that this policy has helped the Cayman Islands, to become one of the places for conducting business off shore.
Bibliography
Cayman Islands Annual Economic Report, 2007, Economics and Statistics Office.
Cayman Islands Annual Economic Report, 2008, Economics and Statistics Office.
Cayman Islands Annual Economic Report,…
