Stopping the Exodus of International Business

October 22, 2010

1064363_push_the_button[Written by Michael Fahy, Bermuda Democratic Alliance spokesperson on Finance]

Nothing that the next likely Premier has said so far in terms of what she will do has been music to our ears. There are a number of issues that are drastically affecting Bermuda’s reputation as a hub for international business, which is, after all our bread and butter.

The trickle down affect of the continued not so silent job loss in this sector is contributing to a downturn in the economy through loss of rental incomes for Bermudians, and loss of support jobs typically held by Bermudians that support a guest worker.

The increase in payroll tax has seen costs for International Business rise increasing the likelihood of them moving overseas to a more stable tax and political environment. Both Mr Lister and Ms Cox have acknowledged that the civil service is a severe drain on our finances – we have said for some time that a civil service freeze and early retirements and natural attrition is a must. But what else can the Government do?

We are looking for the next Premier to be honest. Only when there is a recognition that what is being done so far is failing can we move forward. We need absolute accountability in terms of government contracts – millions has been wasted. We need incentives for International Business through extending the corporate tax exemption beyond 2016 and reconsidering the rise in payroll tax.

We must stop the exodus and redomestications through certain guarantees to international business, starting with an undertaking to stop further rises in payroll tax.

We must support local retailers through only charging duty at the point of sale of the imported goods. Bermudians are looking for ideas on saving the economy. So far what we are hearing is more of the status quo that is now failing us. I am calling for all Bermudians to pay attention and pressure government to stop the rot.

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Category: All, Business, Politics

Comments (8)

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  1. Stop-The-Rot says:

    Mr Fahy,
    The only rot i hear here is the usual tirade and rot that you write in the press. I liken it to the same pro UBP and PLP die hards who type some intellectually questionable material. You repeat ideas that many Bermudians have as if it’s a stroke of self owned and proclaimed genius. Notably while i make no effort to defend current government, it is evident that the holding company moves are caused by US taxation influence. Blaming this on the government is exploting those who have no mind of their own. This seems to be a common denominator in many of your articles.

    • R Marney says:

      The majority of Bermudians (enough to keep the PLP in power) are too stupid to understand what is happening to Bermuda. These are the same people who voted for the PLP in 98 becuase they were promised things that nobody could possibly deliver. I genuinely feel sorry for these people.

  2. Blah Blah says:

    “downturn in the economy through loss of rental incomes for Bermudians”. I have no pity for these people who depend on IB for rental incomes unless they are senior citizens who NEED aditional income. They are the same ones who charge exuberant rents that the average Bermudian cannot afford. The market has been over inflated, based not on supply but by greed. There is no shortage of housing, there is a shortage of affordable housing. MAJORITY of Bermudians cannot afford these rents muchless a home, and this is based on the IB sector. I know alot of bermudians who own homes but cannot afford to live in them so they rent them out. What is wrong with that Picture

  3. terry says:

    Pay dee moregadge…greed… killed the cat and will will kill onions..just like easter lillys………………

  4. Ignorance is Bliss says:

    IB leaving and rental values go down? Wow, what bliss! When so few people are living in Bermuda to sustain the shops, grocery stores and gas stations in this country there will be too many people out of jobs to even afford the lowered rental values.

    • blah blah says:

      So few people??? lol you are very ignorant for thinking that if IB left a large percentage of our population would decrease. Fact of the matter is that IB plays a large factor in our housing crisis.

      But I see a silver lining real soon. All I gotta say is keep building.

      • Ignorance is Bliss says:

        Ah, someone with an economics degree, I see! It’s simple supply and demand, and trust me, you never want demand to go down because the end result is a lot of LB’s going out of business. Ex-pats spend money on more than just rent. At least, when the IB sector collapses the country will be impoverished enough to attract tourists looking for a cheap deal.

        • blah blah says:

          “It’s simple supply and demand, and trust me, you never want demand to go down”

          Actually its the type of supply and demand. The is a high demand for affordable housing but low supply. Currently there is a large supply of housing, but the demand at these current prices is low. Many houses on the market have been there for several months and even years. Why is that? Simple, the average Bermudians cannot afford them and those who can have already bought their homes.

          “Ex-pats spend money on more than just rent”
          The VAST majority of the large salaries of IB ex-pats does not stay in Bermuda, I think you know that. They do spend money other than rent, like basic necessities groceries gas etc…

          So according to you, if ex-pats working in IB contribute so much to our economy.. why are local businesses going out of business? Before you say the recession caused many IB ex-pats to lose their jobs think about this:

          a) At max, 10% of IB expats may have left the island (the absolute MAX)far from the majority
          b) Look at the types of businesses that are struggling or went out of business (Total Home, Greg’s steakhouse, Soloman’s jewellers etc)not the typical retailers that cater to ex-pats. These are stores who have mainly catered to Bermudians.

          Note, I am not anti-expat but as someone who is educated and has a good job it is frustrating the housing situation. The housing market has been over-inflated and a large part of that is due to the IB sector. So when you see homeowners who have had their houses passed down to them charging $1500-2500 for a one bedroom apartment it is not because there is scarcity of housing.