April 1st Fee/Tax Increases: Who Gets Affected?
As of today [April 1st] there are a slew of new regulations coming into effect that not all locals are happy about. Scroll down to see who is affected; from teenagers no longer allowed to “tow” a friend, numerous increased fees, to all working Bermudians facing a possible cut in take home pay, the changes that come into place today have not been greeted with enthusiasm by all sectors.
#1 All Workers
- Due to increases including a payroll tax increase of 2% in the 2010/11 budget, many locals will see a decrease in their take home pay. Unless the employer is in the position to absorb all increases, workers will see around a 1% decrease. For example if you make around $18 an hour, you will take home approximately $15 less a week.
#2 Employers
- The increase shown above is also applicable to employers, as the increases are split between the two parties. For example Bob employs 10 men in a construction company paying them around $700 a week each. Effective today, Bob must pay an additional $15 a week per employee in tax, approximately $7,800 extra a year. For larger companies employing dozens/hundreds of people, the increased cost of conducting business will be substantial. Employers who may be in the position to absorb the entire increase will have to add at least 3-4% to their payroll costs to do so.
#3 Motor Vehicle Owners
- A 5% increase in annual licence fees take effect today for all registrations of motorbikes and cars. For example, licencing the largest class of car jumps approximately $75 a year.
#4 Boat Owners
- Boat owners have a far higher increase then land bound vehicles, with fees for mooring licences almost doubling; increasing from $79 to $150 per year.
#5 Pet Owners
- One pet licence will increase from $69 to $100.
#6 Potential Wedded Couples
- Obtaining a licence to enter into marital bliss will now cost $100, versus the old cost of $69.
#7 Travellers
- Due to an increase of foreign currency tax, which the UBP’s Bob Richards effectively dubbed a devaluation of the Bermuda dollar, it now costs more to purchase US dollars. For example, if you change $2,000 to spend on a shopping trip, it will now cost $10 more to do so. Fees for standard passports have also gone up $18.
#8 Companies Who Import
- In addition to the payroll tax hike all companies must absorb, the increased foreign currency tax puts additional onus on import companies. Jim Butterfield, President of wholesalers Butterfield & Vallis estimates the currency tax increase may cost his company around $350,000 a year.
#9 All Consumers
- It stands to reason that all companies will not be able to entirely absorb the increased costs of employing people as well as increased costs of importing goods, so one can expect many companies to be left with no alternative but to pass additional costs on to the consumer at the retail end.
#10 Job Seekers
- The increased cost of employing people [Point #2], as well as increased costs of importing [Point #9], can be expected to negatively affect the job market to some extent. The raise in cap from $350,000 to $750,000 for tax exemption, could possibly affect the exempt company job market. In order to keep their prime employees, one can speculate that some exempt companies may opt to increase some senior executives pay to counteract the additional taxation.
#11 Some of the Retail Segment
- Three factors could possibly negatively impact some of Bermuda’s retailers; increased cost of employing people [Point #2], increased costs of importing [Point #9], as well as the fact many locals/potential customers will effectively receive a pay cut and have less expendable income [Point #1].
#12 Those who carry HIP Insurance
- Those that carry HIP medical insurance will see a monthly increase of $58, from $299 month up from $241. This makes a total of $696 a year in additional payments.
#13 Teenagers: 16/17
- This is not a fee increase, but a huge change for Bermuda’s teenagers. The Bermuda Youth Licence [BYL] comes into effect today for persons aged 16 and 17, which effectively restricts them from ‘towing’ a passenger, as well as riding at late night [from 1am – 5am]. The teenagers we spoke with this considered no longer being legally able to “tow their aceboy/girl” a grave travesty. They expressed concerns of a dampening of their social lives, sheer inconvenience, and also sympathy for friends without bikes who will be most effected. One mother we spoke with also expressed frustration as her older son often transports his younger sibling, something he will no longer be able to do, putting greater onus for the parents. It has been noted by critics of this policy that the vast majority of traffic fatalities are not teenagers.
