Deloitte 2012 ‘Budget Snapshot’

February 24, 2012

Following the delivery of the 2012 Budget by Premier and Finance Minister Paula Cox this morning [Feb.24], Deloitte released a ‘Budget Snapshot’, which follows in full below, and is available here in PDF form. The ‘Snapshot’ says “Build One Another Further Debt Increases”, and included the graph below

Budget Deficit
Revised estimated deficit for 2012 is $267.6 million, with an original estimate of $146.6 million.Actual deficit for 2011 was $254.4 million, with an original estimate of $143.5 million and a revised estimate of $223.8 million. Estimated deficit for 2013 is $172.1 million.

Public Debt
The statutory ceiling will be adjusted to $1.45 billion from $1.25 billion. The graph below excludes government guarantees for Butterfield Bank, Bermuda Hospital Board and unfunded government pension obligations. Public Bond issuance in 2012 to finance deficit, which includes debt service costs.

Payroll Taxes
Remains at 14%. Salary cap remains $750,000. The payroll tax concessions for the hotel, restaurant and retail sectors have been extended.

Pension
The Occupational Pension Act will be amended to allow for a voluntary suspension of the combined employee and employer contributions of 10% for one year beginning in 2012.

Duty
Fixed rate of 25% at airport, allowance raised to $200 per person. Duty harmonized at all ports of entry at 25%.

All Other Taxes and Fees
Government fees will generally increase by 3%.

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Comments (43)

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  1. Hudson says:

    Wow – frightening graph…

    • Shaking the Head says:

      It is, and it is also very telling. The blame for Bermuda’s woes is always the Global Recession. This graph proves it is not true. Since 2007 revenue has been in the $800 – 900mn range each year. If the Global Recession was to blame there would be a big reduction. The blame is clearly shown – it is expenditure and debt, both of which are caused by the Government, and neither has anything to do with the Global Recession. Facts can’t lie, unlike politicians.

  2. James S says:

    So if you are a business bringing in eletrical goods at 33.5% you now pay more than the individual who can bring them in at 25%. This will surely hurt local business.
    The air conditioning industry and TV shops must be very upset about this.

    • d-reader says:

      do you see what these people charge for tvs

      400 for a 19 ”

      let em be vex mate

  3. Truth (Original) says:

    Wow.

    They are taking in less revenue but expenditures are up. Therefore more borrowing has to take place to account for the gap between the revenues and expenditures.

    ..that borrowing incurs a charge (interest), which is not included in this graph.

    This is why it is essential for the Govt to cut costs. excessive use of GP cars, cell phones/data costs whilst on travel, non-essential travel, non-essential staff, non-essential consultants. Trim trim trim !

    This is simply not sustainable.

    • star man says:

      And call in Minister Credit Cards… now apparently they have an unlimited limit.

  4. d-reader says:

    you more worried about the buisness man than the normal man mate?

    • James S says:

      The business man employs ‘normal’ men.

    • Tired of nonsense says:

      Teh business man emplyes the normal man mate.

      And the rise in duty effects the lowest earners in Bermuda. For this bracket of individuals more than likely cannot afford to fly away and shop for their goods.

      No instead most would shop online for the goods that were either i) not available in BDA or b) too expensive to purchase locally.

      So for the person that orders clothing online the tax increase (described by the Prem as being “harmonization” or “standardization”) is 317% increase (from 6% to 25%).

      So it really, in essence, affects the lower rung more than anyone else.

      Unless local retailers reduce their proces in response. If they don’t then this tax increase is simply a waste of time and another stream of Govt revenue.

  5. Truth (Original) says:

    I also find it interesting that the debt blow up is in conjunction with EB’s premiership. 2008 ish….

    • Al says:

      And term limits.

    • Phillip Wells says:

      Paula Cox became Finance Minister in 2004. The following year, expenditures started to outstrip revenues.

      Ewart Brown became Premier in 2006. The following year, the gap between expenditures and revenues increased sharply and kept growing.

      The global financial crisis did not kick in until 2008.

      • Independent says:

        what does this have to do with this year’s budget?

        why does everyone have to go back to Dr Brown, and what they perceive was done, versus what is being done!

        • Tired of nonsense says:

          Guess the same reason that most harp on about the “40 Thieves”

        • PH says:

          PW’s statement has everything to do with the budget. Here is the exact quote in the budget that makes it important “The community understands that the lingering recession has eroded government revenue over the last few years.”

          The erosion has before this great “recession” came into effect. Comparing all budget statements from 2004 to now is even more shocking as the expensises continue to rise annual whilst revenue trends decrease.

        • Phillip Wells says:

          Did you look at the graph? Ewart Brown (and Paula Cox’s inability or unwillingness to stand up to him) put Bermuda’s finances in a hole that it will take years to recover from. I have no doubt that the recession made things worse, but the graph makes it perfectly clear that today’s problems started well before then.

          There’s nothing we can do about Dr. Brown now, but why is the Finance Minister who presided over this mess still in her job? It has long been clear, from both her words and her actions, that she’s too timid to stand up to her colleagues and do what’s necessary to deal with the debt and get expenditures back below revenues again.

        • media says:

          Becauase the PLP’s propensity to borrow lots of money can be linked directly to Ewart Brown’s time as Premier, as shown in the graph very clearly. We are suffering now because of it. He borrowed so much that now when we actually need to borrow to stimulate the econmomy we are left borrowing money just to cover existing expenditures. That is not stimulus that is just maintaining what we’ve got. That’s why.

        • LOL (original TM*) says:

          It puts to death the myth that the Global Recession is to blame for Bermuda’s finances thats why it’s significant. We have been lie to again……………

          LOL

        • observer says:

          Unfortunately. You are not an independent thinker. I believed in them, I helped put them in power, not this time!! They did well right up to Paula and Dr Brown took over. Statistics don’t lie, Pilatricktions do. Like crime is down and the next day a gunman was right outside the police station. Like tourism is up and it has been one of the best years, and hotels are closing and our poor brothers and sisters have longer lay offs then ever. Like twisting Bob Richards words and he spoke the truth. I use to say he did not know what he was talking about, but now look back, everything Bob Richards said back then now is in place. I though I would never say this, but under the old UBP we could prosper and now our people suffer because of the promise Dr Brown made before he came back!! But what is even sadder, is that the Cabinet allowed it. I have always been PLP, I am not blinded anymore, we all need to make this better for our children, and until the hatred is out of the PLP, it will continue to let us down.

          • kiskadee says:

            At last an intelligent PLP Bermudian has seen the light. You must all see what a disaster this Government has been and get rid of them before we really are a Third World Country
            Before it is too late for us all please vote them out come election time

  6. The summary comments by Deloitte indicate that Premier Cox has delivered a practical budget. All economies will seek to maintain a reasonable degree of expenditure during a recession and the Premier has done so in this instance.

    The increased debt from prior years is explained on page 3 of the budget statement, mostly payroll tax roll backs and tax concessions to the hotel, restaurant and retail sectors.

    • Truth (Original) says:

      “practical” given the state we are already in. It is not Deloittes job (or interest) to be political.

      ..I bet if you asked the person who put this together his/her personal feelings on it, he/she wouldn’t use the word “practical”.

    • migrant worker says:

      The page 3 smoke screen is not a valid explanation for the increased debt. In each of the past 10 years actual expenditures have exceeded budgeted expenditures (and that was even after budgeting for a deficit). Eliminating revenue that you never had doesn’t create the problem, spending money you don’t have is the issue.

  7. relevant says:

    Good work in being transparent…i’m sure these figures had to be given ahead of time in order for Deloitte to provide them on the same day. It took guts for the Premier to put this out there, cause the picture is NOT pretty…I may be mistaken but I don’t remember others being so frank with the people like this…we all have a hand in the expenditure not just government…

    • Family Man says:

      They weren’t given to ANYBODY ahead of time. Deloitte’s just shows what you can do when you have to work for a living.

      How are those BIU accounts for 2010 coming along?

    • Truth (Original) says:

      @relevant- Deloitte are one of the 4 major accounting firms. This is what they do for a living.
      They can slap this together without any help from the Govt. seeing as though, most of the figures in here are historical, the chart was already done. All they need to do was update it with this years numbers and refresh the spreadsheet.

      I don’t think the govt helped at all.

      To your point about expenditures, you don’t seem to understand that the expenditures in this graph above is GOVERNMENT finances, not individual finances. I don’t spend Govt money, Govt Ministers and civil servants do. To said, the GOVERNEMNT is responsible for the monies spent in excess of the revenues taken in.

      • In Other News says:

        @ Truth….my statement was not in the literal. There’s seems to be an apathy amongst many Bermudians that wait for government to do EVERYTHING. I admit, I used the term “we all have a hand in the expenditure” a bit loosely, so I’ll rephrase, many in the private and government sector contributed to the over expenditure. We failed to make family priority, became caught up in materialism, lost our sense of community and have started chasing the dollars, hence the money government contributes to rehabilitative services, education, keeping up with the jonese,the money lost in fraud or frivolous spending of those that can raid the public purse etc is all a reflection of the mindset of the majority in our country today. We continue to point fingers and blame government when we should simple stop whining, man up and start making differences were we can. The MPs are only a reflection of what we as a community allow them to do.

        • Truth (Original) says:

          I think we should do both. Man up and accept responsibility and point fingers and hold our MP’s and Government responsible.

  8. Bewildered says:

    Where is the reduction in Minister’s salaries?

  9. LostinFlatts says:

    Remarkable isn’t it. 2002 through 2006 – Revenue matching Expenditure. Healthy financial shape.

    2006 on, a certain Premier takes office, and suddenly the PLP starts borrowing massive amounts in the short term so it can spend more than it brings in. Pre-recession. At a time when we could have been saving in case there was a recession.

    So now, a recession later our economy is in a free fall due to this unnecessary, irresponsible extravagance and where is said Premier? Off into the sunset.

    It wouldn’t take much research to see the number of Bermudians who said this is exactly what would happen when Dr. Brown came to power. Yet his supporters dismissed such worries as ‘haterz’ and racists.

    Well now even they should be able to see just what he did for Bermuda. That debt figure is Dr. Brown’s real legacy.

    • Shaking the Head says:

      Dame Lois Browne Evans warned against Dr Brown. She has been proven right so obviously she was a hater.

  10. James S says:

    Exactly how do they intend to Police the foreign fishing vessels a 100 miles off shore? Maybe we can call on the Royal Navy. Could this be ‘The Cod War’ all over again?

  11. Trident says:

    do phillips wells and LIF know something that the rating agencies don’t? last i chkd spain, ireland, greece, and even the US spend more than they take in. having grown up in bda under he UBP where the books were balanced but nothing was built for the citizens i’ll take spending and building over the ubp do nothing 80s. and we wonder why kids are ganged up today, maybe if the UBP built just one community centre or supported just one head star programme. wells ur “real” country is a mess so its rich to see that u have figured bda out in just a few years. oxford? cambridge?

    • PH says:

      Do some research into when the Community Centres lost there funding. You might be surprise whom was in power and who supported the action.

    • Robb says:

      Rockaway, Frogs Lane Housing and Duck’s Puddle Housing were all built during the UBP Government. Parts of the National Stadium were completed. All Government properties were maintained in good condition, unlike under the present Government.

    • LostinFlatts says:

      Well I do know that we just had our rating downgraded, but I’m sure that was the UBP’s fault too.

      Perhaps you’re right, we start looking to Greece and Ireland for how to manage debt. Very clever.

    • bermyluv says:

      Government “TAKES” money from people to provide “SERVICES” to the people. We are not paying tribute to Government. We are not subject to Government…Government is subject to us. Government can only give what it takes. When Government gives what it doesn’t have in order to please the current electorate, it will have to take away from the people in the future.

  12. media says:

    Don’t forget the Incinerator, the Prison, the Airport, the Bus Depot and more. The line about the UBP never investing in infrastructure is simply not true. I’ve heard it spouted on the talk shows too. Yes, they were more conservative with their spending, something that we might be able to appreciate more now than then.

    • LOL (original TM*) says:

      Shhhhhhh fact are inherently biased to the plp supporters like Trident your rock his core system and we be payin for him up MAWI……..jeezzz

      LOL

  13. Roger says:

    Has anybody added up the continued loss to the public purse from international business leaders leaving?

    Taking one well paid executive (many have left in the last year or so and many continue to leave)

    $750,000 @ 14% = $105k per year lost. Add in the duty paid by that individual, payroll tax for their nanny etc. and you could easily say $150k leaving the public purse per year PER INDIVIDUAL.

    That $150k per year is a MASSIVE loss in the scheme of things. It would be great to see a detailed analysis of the loss to the economy from these continued departures.

  14. Roger says:

    That $150k loss could have paid for a 5% raise for 40 government workers on $75k per year.

    Does nobody understand that?