Minister: Trump, UK, Taxes & Impact On Bermuda
While delivering the 2017 Budget, Finance Minister Bob Richards addressed some of the developments taking place around the world and their possible impact on Bermuda, saying it is “part of the current international reality impacting and threatening the standard of living of all Bermudians” as the “risks to our international business model are very significant.”
What Does The Election Of Donald Trump Mean For Us In Bermuda?
Minister Richards said, “The Trump Effect, what does the election of Donald Trump mean for us here in Bermuda?
“The answer depends, perhaps, on whether we believe he will [or can] do all that he has said he will do. He has already reversed himself on a number of campaign promises, even before he became President.
“However, with the Republicans controlling both houses of Congress, for the first time in a very long time, the US Government has the opportunity to make major shifts in policy, especially fiscal policy.
“The idea of a cross border tax is particularly worrying to our international business sector. If taxes were placed on cash flows from reinsurance claims it could be catastrophic for Bermuda based reinsurance companies.
“Mr. Trump’s campaign emphasized a strong pro-growth policy, which will likely manifest itself in large deficit-financed infrastructure projects with little regard for the deficit or inflation.
“There will also be strong attempts to reform and lower the US tax structure, something that is also likely to swell the deficit, particularly as there is no talk about paring Government spending.”
Likely To Be A Two-Edged Sword
“For Bermuda, this is likely to be a two-edged sword. The classic Republican cutting of taxes to stimulate growth should have a positive effect on our tourism business,” the Minister said.
“More disposable income in the hands of more Americans will provide Bermuda with a very good opportunity to increase the numbers of people vacationing on our shores.
“If the President’s tax policies have the effect of ‘bringing home’ jobs that were outsourced to other countries, that will also present increased opportunities for Bermuda tourism. Of course, ‘if’ is a powerful word.
“I suspect that the wage disparities between the US and many developing countries are so large that no amount of tax engineering will be able to bring many of those jobs back to the US.
“Added to that, as in the Ford Motor Company’s plant in Mexico, many foreign manufacturing jobs owned by US corporations market their products globally as opposed to selling them back to the States.
“Moreover, the march of technology, particularly in the area of manufacturing, means that the re-domiciling of manufacturing to the US would not result in the re-domiciling of the same number of jobs, as many of them would be replaced by machines.
Possibility Of Corporate Tax Cuts In USA
Minister Richards said, “The other edge of the Trump sword carries with it a very serious risk to Bermuda’s economy. Tax reform in the US context will definitely mean corporate tax cuts.
“The scenario whereby US corporate taxes are cut to such an extent that there will no longer be a comparative advantage to use the facilities that Bermuda offers is now possible.”
Risks To Our International Business Model Are Very Significant
The Minister said, “There is also the possibility that the details of tax reform could either intentionally or unintentionally target our [re]insurance business and damage Bermuda’s comparative advantage, resulting in the re-domiciling of companies to the States with the corresponding loss of Bermuda jobs and income.
“We do not know the details of US tax reform yet; perhaps nobody does at this time. However, the risks to our international business model are very significant and we must be extra alert and vigilant.”
Initiative Is An Affront To Bermuda’s Constitutional Rights
Speaking on the proposed Bill related to Overseas Territories in the UK, the Minister said, “On the other side of the Atlantic, a number of MPs in the British Parliament are proposing an amendment to the ‘Criminal Finances Bill’ that would enable the British Parliament to use an Order in Council to compel Overseas Territories to adopt the UK model of public beneficial ownership registers for companies incorporated in the territories.
“The Bermuda Government is strongly opposed to this initiative as company business, and anything that has to do with the governing of Bermuda incorporated companies, falls squarely within the purview of the duly elected Bermuda Government, and the Minister of Finance in particular.
“This initiative is an affront to Bermuda’s constitutional rights enshrined in the Bermuda Constitutional Order and if it gathers favour in London, we will fight it with all the means at our disposal.
“Constitution aside, an Order in Council by a large country like the UK, in whose parliament Bermuda has no representation, against the interests of a small one like Bermuda, whose laws are the creation of a locally, democratically elected legislature, in this day and age, would be an anachronistic act, typical of a time long past, and diametrically opposed to contemporary internationally accepted principles. Such an action would place Bermuda at a distinct competitive disadvantage to other financial centres.
“Public beneficial ownership registers are not the world standard but are the hobbyhorse of factions within the UK. Bermuda prides itself on being early adopters in all the global standards for transparency and cooperation and we have the track record to prove it. Bermuda’s position is clear: we adopt global standards.
Intimidatory Tactics On Overseas Territories.
“The UK would be better served to use its influence to persuade global standard-setting 11 bodies like the FATF, the OECD and the G7 to adopt the public register standard, instead of intimidatory tactics on Overseas Territories,” Minister Richards saod.
“Then there are our ‘friends’ in the EU, some of whom appear determined to find some way to conjure up yet another black list to vilify ‘low or no tax jurisdictions.’
“Just in recent weeks, a Member of the European Parliament castigated the island of Malta as being a tax haven even though it has a headline corporate tax rate of 35% and is a member of the EU. What does Malta have in common with Bermuda? Nothing, except it too is a dot on the map.
“It all fits into the general pattern of large powerful countries with high tax rates and low economic growth targeting small countries to use as political scapegoats to please their constituents who are discontented with their economic situations.
“This is part of the current international reality impacting and threatening the standard of living of all Bermudians.”
The full Budget Speech is below [PDF here]:
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Trying to remember when I commented that politicians hadn’t said this since Trump got in. Thank you Captain Obvious.
Was P.L.P de blame for de last one?
Now worldwide issues does impact bda.
The impact of the 2007 US recession was not supposed to impact bda. – says this same guy.
hmmm
You early need to find a more intelligent source of information average. Not one person ever said the recession would not effect us, we couldn’t ride it through properly because whilst it was occurring a certain few couldn’t hold onto the cash and kept spending more than we were earning. The intelligent people changed their whole lifestyle to wait it out. And the fact is,is was Paula Cox that stated we had nothing to fear from the ressession
.
Whenever he warned about the effects of the crisis, Burch said “Bermuda is different” “you don’t understand” “you’re making mischief”. Burch and Cox had their heads stuck in the sand. Incompetent buffoons.
He warned over and over about excessive government spending and poor fiscal management affecting our ability to deal with a down turn. What more did you want exactly?
No. It was Burch who said we were immune from problems caused by the debt crisis. You lot love rewriting history don’t you.
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Why do the so called sin taxes increase EVERY year?
Restaurants and Bars will have to close soon because of the prices they have to charge to stay alive.
There is no entertainment. Every 2-4 drinks bought, is a bottle. Are we being encouraged to buy the bottle and stay home?
Beekawze it’s a Sin.
Jingus…..
Rubbish ‘Um’….. Iceland’s prices for example are much the same as Bermuda’s, Bermuda has a far better climate, but Iceland’s tourism, bars, restaurants and retail section are thriving year round (and they have a wonderful, modern airport facility….)
The point is that tourists ARE prepared to spend significant dollars for a quality product – like Bermuda’s Green family we all need to ensure that we are providing the best possible product and service instead of moaning that ‘Bermuda is pricing itself out of the market’.
The restaurant charge 17% grats for poor service
A 10 dollar burger and 12 for a beer and the wait staff can’t
Speak proper english
Why do we bring in this non english speaking wait staff? Bermudians can do it sure and we speak english….so why don’t they apply? The service industry used to be full bermudians. So where did we change to not want to do certain work?
It’s suchard a Hassel to advertise overseas and bring in workers.
Unfortunately foreign workers are paid less and do not call in sick they are more reliable and are willing to work longer hours if needed. Just ask for an honest answer from any restaurant owner. You cannot run a business if the staff are unreliable. The Bermudian worker needs to get their act together.
Well some of you are starting to see if Trump force’s these companies to leave we will be up the creek and all you pop boy who’s been doing your best get them out.
Lets not remove Bar/wait staff that don’t speak proper English. Or are you just referring to foreigners?
The problem I have with Bob Richards is I don’t believe a word he says. Read carefully and yet again it’s small Bermudian businesses that get stuffed in his most hypocritical of budgets. Perhaps Bob has not noticed that the retail sector is about half of what it was a decade ago, so let’s raise their import duties by 33%. Oh, and ignore 133 and 134 of the companies act and bring in a bunch of people (anybody checked out Dockyard lately) so we can pretend there is growth. The airport, yes it is a sell out and a betrayal of Bermudians. As for the payroll taxes, cut to the chase Bob and we all know it is called income tax – and it is the guys who are taking the risks being in business who are yet again expected to pay more. I could go on but I’ll just close a few more shutters and turn off a few more lights. Make no bones about it, this Government is anti Bermudian business and the sooner they go, the better.
It is obvious to me that this years budget was hastily put together as it was based on taxation with no forethought of the consequences.
The next election will most likely be full of surprises, I forecast that the voting public will finally be voting with their heads instead of their hearts, there will be some politicians out of a job on both sides of the isle,the voting public will be looking at qualifications not noise makers.
I suspect nobody on the hill asked the question ” What if ?
Our Government has succeeded in enhancing Bermuda’s reputation in the leisure market of being too expensive, virtually every thing here cost twice as much.
How on earth can they tax people who are already struggling financially ?
For our tax dollars we expect better management of the public purse. Taxation is their easy way out.
The policies of Robin Hood are not good business practices and will only succeed in driving entrepreneurs elsewhere to invest their money.
If you give a prudent man a dollar and if he is smart he will double that.
Tax and spend policies will send Bermuda to the grave yard !
My father said ” A man who works from nine to five has nothing,
however, if a man works from nine to nine he will have everything.
Money does not grow on trees Mr finance minister.
Why should “empty nesters” pay to educate another families sparrow ?
Turn Warwick camp into hotel property.
Keep your hands out of another man’s pocket !
You have no idea how right you are. This budget will likely put many small Bermudian owned firms out of business while the great sell out continues.
Am I reading this correctly?
$147 Million on “National Security” – what is this for? Who do we pay this to?
I’m assuming this is a combination of the police and regiment combined. I did hear they are increasing the police force.
And apparently not a thought for the Seniors. Why could not the HIP/Futurecare co-pays or Deductibles been eased for the Pensioners, let alone one or two options offererd. Say $5,000 for an extra $100 premium or such like. Pensioners are struggling to meet their medication costs. Disgraceful. Say goodbye to the OBA – of that there is no doubt- at the next Election. Four votes in S.t George will ensure that.