CARTAC Report: Reforming Bermuda Tax System

October 6, 2017 | 5 Comments

Premier and Minister of Finance David Burt tabled the CARTAC report on “Reforming the Bermuda Tax system and Its Administration for Fiscal Consolidation” in the House of Assembly today [Oct 6].

The Premier said, “In 2015, CARTAC completed a review of Bermuda’s tax system and its administration. The CARTAC mission team visited Bermuda from September 29th to October 12th, 2015 and met with various public sector officials and key stakeholders in the private sector.

“Many of these stakeholders requested access to this document, but the former Government refused to share its contents. In keeping with its pledges of transparency, this Government has now tabled the CARTAC review in Parliament so that parliamentarians and members of the community can be made aware of the recommendations.”

The Premier’s full statement follows below:

Mr. Speaker, in accordance with the Government’s commitment made in the 2017 Speech From the Throne, I am pleased to table the Caribbean Regional Technical Assistance Centre [CARTAC] Report entitled, “Reforming the Bermuda Tax system and Its Administration for Fiscal Consolidation.” The report was tabled in this Honourable House today.

Mr. Speaker, Honourable Members are aware that in 2015, CARTAC completed a review of Bermuda’s tax system and its administration. The CARTAC mission team visited Bermuda from September 29th to October 12th, 2015 and met with various public sector officials and key stakeholders in the private sector. Many of these stakeholders requested access to this document, but the former Government refused to share its contents. In keeping with its pledges of transparency, this Government has now tabled the CARTAC review in Parliament so that parliamentarians and members of the community can be made aware of the recommendations.

Mr. Speaker, the report indicates that the main objective of the tax review was to increase tax revenues. The former Government’s preference was to increase the revenue provided by the existing taxes though they were open to proposals that would expand the tax base and improve equity. Another objective was not to increase the size of the tax administration but rather improve its efficiency and simplify compliance. Therefore, the introduction of a full-fledge income tax or a value-added tax was ruled out. Given this guidance, the CARTAC mission concentrated its effort on analyzing taxation of labor remuneration, of goods and services and of property, and reorganization of the tax administration.

“Based on the above guidance, reform options were to satisfy the following tax policy principles: increasing revenues at about 0.5 percent of GDP annually for three consecutive years with measures broadly based on changes in existing taxes and fees; simplification of the tax system, in particular rationalization of the number of taxes/fees and broadening the tax base; and, improving equity of the tax system by keeping the tax burden on the poor broadly unchanged relative to the current situation.

Mr. Speaker, the review covered the main taxes, including the following: payroll tax; custom duties; stamp duties; all taxes and fees similar to an excise tax on goods and services; and land tax.

An in-depth review of the tax administration and its procedures was also undertaken to identify how the tax administration could cope with proposed policy changes, and what were the reforms that could improve its operations— even if policy changes were not introduced.

The recommendations of the Mission are included on pages 10-13 of the Report and I would encourage Honouarble Members and the general public to review the Report and recommendations as we prepare to establish the Tax Reform Commission who will also conduct a review of our tax system, but with a much wider mandate.

Honorable Members are advised that in accordance with the CARTAC “Operational Guidelines for the Dissemination of Technical Assistance Information”, the Ministry of Finance has obtained the consent of CARTAC to publish the Report.

Thank you Mr. Speaker.

The CARTAC Report follows below [PDF here]:

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Comments (5)

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  1. Rocky5 says:

    Here we go! Income tax including rents, dividends, interest, capital gains tax, sales tax and PLP spending galore! This isn’t going to end well..

  2. Vigilante says:

    What is the Premier’s stance on CARTAC’s recommendations? His opinions are conspicuous by their absence…

    • B. R. Richardson says:

      You are acting as if the PLP commissioned this report, No it was your oba.

      • Vigilante says:

        Not at all. Surely the Premier, in his capacity as MoF must have a thought one way or the other? To put out to the public a document drawn up by a Caribbean task force, proposing such sweeping changes, and not comment would seem a dereliction of his duty…or as you suggest, he is allowing us to infer his disagreement simply because the OBA requisitioned it? Seems far-fetched…

  3. As much as this might enable to borrow… It might as well disable on an assured fiscal year at gdp.
    This is a presipice that requires great care and perusal as…

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