Sir John: Economic Stimulus Proposals
Everything from abolishing work permit limits for key International Business employees to dropping the requirement for firms competing in the local economy to be at least 60 percent Bermudian owned will be up for discussion at a public forum on stimulating the island’s economy.
Hosted by former Premier Sir John Swan and political and economics commentator Larry Burchall, the meeting will be held on Thursday, [Jan. 19] 2012 at City Hall Theatre from 12:00 p.m. to 2:00 p.m.
Sir John and Mr. Burchall today released some preliminary notes on ways in which Bermuda’s economy could be kick-started within a matter of weeks by way of wide-ranging Government reforms to the island’s regulatory infrastructure and immigration, property ownership and tax laws.
“All of the following recommendation can be implemented by policy and legislative changes that could be done within one to two months and would have an immediate effect on the economy,” they said.
Their talking points appear in full below:
City of Hamilton
Extend the city limits to allow for the development of high rise condos by International Business for “key” employees.
This would be the only area this would occur which would help keep congestion out of the rest of the island.
Make City of Hamilton an Economic Zone
- Duty free on materials for construction & Payroll Tax concessions
- This would stimulate the construction sector.
- Allow for foreign purchase of apartments
- Most foreigners are used to living in a city environment and this would keep the outlaying country areas available to Bermudians and their families.
- Remove restrictions on law & accounting firms. They can encourage current clients to move their legal and financial services to Bermuda.
Development of the Waterfront to include:
- Convention/Entertainment Centre
- Casino
- Restaurants
- Retail shops
This should be a high priority and any discussion on cruise ship gaming should be only after a policy on gaming is determined.
High Net Worth Individuals
Allow for approval in principle to bring “key” employees, both professional and domestic, with them.
They would have to pay payroll tax for these employees which would translate into additional Government revenue.
- These individuals will require various services such as transportation, home renovations, legal etc. Therefore if the Bermuda does not have the domestic portion of employment, they would still find jobs in these other areas that would still need to be catered to.
International Business
- Remove the 60/40 rule
Property Ownership
- Relax ownership restrictions on married couples where only one is the Bermudian. Purchase of the 1st property would not require government approval. Why should a Bermudian be penalized for wanting to own “a piece of the Rock”? This would translate into Government revenue by ways of duties and fees.
- Lift ownership restrictions on PRC holders to allow for the purchase of one property. These Permanent Residency Certificate holders are told that they can reside in Bermuda until they die, but yet are restricted from having a house to die in. Allowing them to purchase a home would again translate into Government revenue by way of duties and fees.
- Liberalise immigration policy to allow for Bermudians to sell to non-Bermudians where property is above a set ARV. Bermudians lose with the current legislation as it puts the foreigner at an advantage as they are the only ones who can sell to other foreigners. This would enable Bermudians with large properties to compete with the foreigner who has a property for sale. This would be additional Government revenue by way of duties and fees and foreign exchange. This would also stimulate the construction industry as these foreigners would like to remodel their new purchases and therefore creating jobs for Bermudians.
- Change condo ownership policy to allow for Bermudians to sell to non-Bermudians where property is above a set ARV
Same reasons as stated above:
Restrict land ownership of companies after 60/40 removal to:
- Major Infrastructural Projects: 100% foreign ownership of the facility with long term leasehold on the land. Company must be listed on the BSX
- Major Service/Utility Companies: Foreign ownership of real estate for the purpose of operation and management of the business. Company must be listed on the BSX
- In both cases above, Bermuda would have first class infrastructure facilities to compete with the rest of the world and Bermudians would still have the opportunity to be a shareholder of the Company and collect dividends.
- Commercial/Retail Business: Foreign ownership and management with Bermudian’s retaining real estate
This would improve the high end shopping for tourists, employ Bermudians and Bermudians would also collect rents.
Status/Residency
- Open residency rights to a wider qualifying group. Implemented by Government Jan.1.12 to “Key” employees of companies who meet certain requirements. Even if the individual does not employ Bermudians but is very philanthropic they should also be considered for PRC.
- Grant Bermudian status to a limited number who are existing PRC Holders
Bermudians status should be an honour that is granted and not bought. This process could be done by way of nomination, similar to Queen’s Birthday honours and every Bermudian would have the opportunity to nominate someone.
Taxes
- End senior benefits such as free land tax above a set ARV. If a senior has the means to have a large home, they should have to pay their land tax which would translate into more Government revenue.
- End senior benefits of free car registration above a set vehicle class. If a senior can afford to purchase a luxury or large vehicle they should have to pay the registration fee. This would increase Government revenue and it would also stop the fraud that is occurring with grandchildren and children putting cars in senior’s names to avoid paying the fee.
- Payroll taxes should be reduced to zero for at least three years for employers paying full-time Bermudian employees and self-employed individuals (e.g. Taxi drivers) receiving less than $50,000 per annum. This would lift the burden on persons who are already struggling to provide for themselves and their families.
- Offer a two year payroll tax holiday for: new international or local business which hire Bermudian employees and new Bermudian employees hired by existing businesses. This would encourage businesses to give Bermudians jobs.
- Remove tax on boats and increase mooring fees to enable Bermuda to become an international boating centre. This would encourage more foreigners as well as Bermudians to bring their boats here. This would translate into more jobs at marinas and an increase of revenue to the Government/“Queen’s Bottom”.
Telecommunications
Bermuda should free up the telecommunications market to maximize new opportunities in technology and minimize cost as a result of competitionThis would increase competition and make Bermuda more relevant in the international stage. Due to our limited resources when the latest technology is offered we should have an open mind to make Bermuda as current and efficiently connected as possible e,g, most place worldwide are into a 4G network and quickly moving beyond that. Bermudians would also benefit as they would be able to get more for their dollar.
Work Permits
Allow companies during the incorporation process to apply to immigration for approval in principle of “key” employees and both processes should be executed in a prescribed time periodThis would facilitate the companies’ ability to raise capital by satisfying investors that they can get certain “key” employees. Immigration should be able to tell the company that they can have “X” number of employees as key.
Remove term limits on work permits
This would be for “key” corporate employees.
This is a collective effort and we need your support, comments and ideas. So come out and here how Bermuda’s economy can be regenerated.
For further information or to express your comments email us at economy@challengerbanks.bm or visit us on Regeneration of Bermuda’s Economy.
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Sir John and Larry Burchall must have a lot to say. They’re both speaking at the Chamber of Commerce Forum on January 25th, and now they’ve organised they’re own forum. Something doesn’t smell right to me.
I’ll you what doesn’t smell right, the economy, the debt and the ideas void that is the PLP. You failed. Live with it.
You’ve obviously been mixing with the wrong people to know the smell of sense and reasoning. Obviously no one expects every suggestion to be implemented, but when the PLP supporters trumpet on with calls for ideas, here are some. What does the PLP propose to do? Maybe that’s the odd smell you sense, the smell of panic.
OR maybe their little brains working overtime and causing a burning smell, not used to working, just travelling.
LaVerne dear – you are such a waste of time.
Ms. Furbert – that smell is called progress.
I like most of these ideas but ending seniors’ land tax exemption is a bit much. Some people put most of their capital into their homes over their working years. When they retire they move to a fixed income that, more likely than not, does not move with inflation. They could have built a wonderful home over the years to retire in but that does not mean that they are rolling in a bucket load of cash. They could be put under considerable financial strain with the ending of the exemption. Perhaps even forced to sell and downsize. Although, if the other real estate proposals come into effect they might have a wider audience to market the sale to.
Ride
You have some good points Sir John. Too bad they don’t listen to what you have to say.
This proposal is Full of so many deadly loopholes, it gives me creep!
“Offer a two year payroll tax holiday for: new international or local business which hire Bermudian employees and new Bermudian employees hired by existing businesses. This would encourage businesses to give Bermudians job”
i can start and close a company is 2 years and never pay payroll tax!!!!
Erm, yes. That’s the whole point. It would give you two years of relief for your new business idea to gain traction. If it proves profitable, then you would likely opt to keep it going and you start paying payroll tax. It’s not a loophole, it’s an incentive. It creates new businesses and jobs.
I agree with Ms. Furbert when she asks why the current government has nothing to say on improving the financial situation in Bermuda….Kudo’s to Ms. Furbert for promoting this event at the Chamber and breaking from party lines. I, like Ms. Furbert, agree that something does not smell right with the current government when indivduals are forced to dedicate their own time and energy to trying to sort this mess out.
Laverne
Do you have an economic stimulus proposals that you’d care to share?
I could be wrong but does a lot of this seem like a take over for people not bermudian I could be wrong some things are ok but looking at the surface and they are just suggestions lots of the money will go over seas and Sir John can biuld his casino after all
The local economy needs liquidity. It needs cash flowing. With fewer high spending expats, and a huge debt burden created by the PLP we need that liquidity now. Cog’s tinkering with permits and the sending home of pot washers is not going to be enough.
PLP housing policy has killed the real estate market and killed lending. The knock on effect to local businesses has been devastating. The PLP is out of ideas. It has failed.
The continuation of idiotic protectionist policy will be the end of Bermuda. This is what Bermudians voted for and they are now seeing the results.
are you an economist?
Merely pragmatic and not constrained by idiotic dogma.
Here’s what happens when you abolish the 60/40 rule to all of the islands’ small businesses, i will give plumbers/electricians as an example.
When the rule is abolished Alpha and Omega Electric Inc located in Long Island New York will send 50 of its 1000+ staff to Bermuda to set up a Alpha and Omega (Bermuda) Plumbing and Electrical Services Ltd. They will house them in barracks bought with the relaxed ownership laws and they will set about to undercut (even at a loss because their mothership company in Long Island can sustain the losses for a while) every small (and large) plumbing and electrical business on the island. This will eventually result in the closing of every Bermudian business in this category. Once Alpha and Omega are the only options left on the Island they will jack their prices up beyond existing levels because the fat cats in Long Island won’t give a rats azz about Bermuda or Bermudians! This is something i can promise will happen at everyone’s peril.
I understand your point and see where you are going with this. Just a bad example. Given that electrician positions have been classified as “non specialised jobs”, 50 staff from Alpha and Omega will not work under the current government. They will have to employ 50 Bermudian workers.
@fact…consider this – they will advertise for 100 jobs and get 50 Bermudians (maybe) and bring in 50 of their workers….after a while everyone who used to work in the industry for Bermudian companies will eventually work for Alpha and Omega after the Bermudian businesses close. Even though the industry fully employs Bermudians it will no longer be owned and operated by Bermudians. it may even freeze out the union; an overseas company will not be affected by union action in Bermuda, Alpha and Omega can let their Bermudian workers go 360+ days without working and without pay because their headquarter operations in the US is still ticking along…the only people to suffer are Bermudian families and clients.
Agreed the 60/40 must stay on place.
LOL
Bermuda gave up it’s choice/options/right when it elected the PLP. That’s the choice Bermuda made.
@The Observer you are absolutely correct…great example..
Before some of you start sounding like Tea Party Movement.. the world financial institution contributed to some of the major financial problems we have now… ( NOT the DEBT, that’s local)
For Bermuda economy… we cannot just throw any idea on the wall to see what stick ( popular) and work with it. Like every country in the world most of the economies are in bad shape. we just need to be smart. First, if we need to stop the BLAME game and get to work on ideas that will help..Sir John have some good ideas, let’s match up his ideas with our ideas..
LEAN FORWARD BERMUDA….
These plans are not in the best interest of the ‘people’ of Bermuda. We would be giving up everything. Then where would we go?
My resume is polished off and ready to be sent overseas should we stay on our current track. We need to seriously explore radical ideas like these which could significantly bolster our economy and well-being.
Totally agree.
The problem is that if the ideas don’t neatly fit with the PLP protectionist ideals, they won’t be allowed to be implemented.
So (sadly) keep polishing that resume.
@ Mike…protectionist??!! John Swan has benefitted tremendously from “protectionist” Bermuda when he was establishing his businesses. As Premier he also had the perfect chance to abolish the 60/40 rule while he was in the process of growing businesses…but chose not to so that he could protect himself and other Bermudians!
They booted her nasty self out anyway but give her a sweet thank you but get lost note awh!
Would anyone agree that if we as Bermudians were offered (or influenced to purchase) shares in a company that is mandated to build a Hotel, we would quickly raise enough capital to build that hotels? Maybe call it the BERMUDIAN! I think that what we all want is a simple and stable investment, where we can have a direct impact on its success. We know that our International counterparts want hotels (find a need) and we know that there is still money floating around here in Bermuda (fill a need) and we even know that the rich Bermudians will likely try and buy up all the shares, but a simple cap on the number of shares available could limit that possibilty. Let’s not wait for the foreigners to build!!! I believe in Bermuda so I will! (COURAGEOUS)
This sounds like “free trade” the Americans started pushing in the 80′s, without clear and frank discussion of its long-term impact. Look how significantly it changed the structure of the US economy and, more importantly, the long-term social-economic effects (increase in the wealth gap, higher unemployment, decimation of middle class jobs, etc.). Essentially in the long-term, the net effect was job losses, not increases (or increase in lower paying jobs for Americans). Note: people at the top were not too effected; what about the 99%?
The same will ultimately occur here if we implement policies without frank discussions and the right level of protections in place…more jobs will be outsourced (wage arbitrage). Bermuda/ians will lose out. When we opened up the local banking sector, was there a net jobs gain or loss for Bermudians? Did this result in more or less opportunities for Bermuda/Bermudians? Just read today’s paper on Ironshore and then apply that to the local economy. Who really benefits?
Little evaluation of the likely outcomes of the espoused policies seems strikingly missing. You cannot make policy just based on economic goals alone (in some cases I have to assume self–serving goals too). What about the social-economic changes that will result? One obvious and glaring consideration is the state of Bermuda’s education system. If you open the local economy as suggested (too much and too quickly), what is the likely outcome? Will Bermudians ultimately get/keep the good jobs? What is the impact on average Mr. and Mrs. Bermuda? We’ve already seen how inflation has impacted Bermudian families over the past 15 years.
We must not be lead by the all mighty dollar Alone, but after clear and honest evaluation of the likely long-term impact(s) of proposed polices (social-economic, environmental, etc.) It horrifies me to think that clear and frank discussion may not take place or matter. Remember, money has no social conscious or allegiance to anyone or place. Remember Ross Perot? I told you so…!
Having said the above, I agree that we carefully need to make changes to increase economic activity and opportunities for Bermuda/ians; and in such a way that does not disenfranchise the people that have been here for centuries. There have been so many good suggestions already. So, bearing in mind that we’re 70,000 people in 22 square miles:
1. I applaud efforts to increase activities in the IB sector. We need to invite people to our shores to work and treat them like human beings for god’s sake.
2. I agree there are unnecessary restrictions on families with a foreign spouse in respect to home purchases. Plain discriminatory if you ask me!
3. Yes, I agree foreigners should be able to purchase properties over a designated ARV from anybody, Bermudians included. It worked before and it wasn’t broken anyway. Reduce property purchase tax for foreigners for a certain period.
4. Yes, gambling should be considered; but in a responsible way and where also government reaps significant revenues. We should also encourage online gambling sites to domicile here. Tax them on revenues. Shameful if implemented and the majority of profit goes to the private sector. We have a huge national debt! BTW, cheesy small casinos all over the island won’t work. Fresh ideas! Think big! One large one in the City or on an outlying island. I’m sure hotels will be vying for casinos, so this won’t happen. Joint ownership by hotels?
5. I’m very skeptical about totally opening up the local economy. If the local economy’s engine gets going, there will be a trickle down effect and this should spur investment. Out sourcing the investment/ownership runs the risk of a less Bermuda centric perspective. We have a few examples of this already…eh? Can understand for special projects, yes!
6. Revitalization of Hamilton and St. Georges is a must!
a. Marine tourism
b. Better cruise ship schedule (ok, in port gambling issue. They do gamble plenty at sea; but if in-port ultimatum can we tax?)
c. Enforce existing retail policy (no retail businesses is not “retail”)
d. Concert/Civic centre in the City. Funding? National lottery?
7. Better use of assets for entertainment/attractions:
a. Water-park?
b. Yes, beach pavilions with entertainment! Be environmentally smart but practical.
c. More summer beach concerts (world renowned artists). We have to attract younger tourists for god’s sake. Don’t like the noise? Get earplugs!
Ok, that’s more than 2 of my cents! On to the next thread! Lol!
So well said………!
I am moved to thank you for this well reasoned and thoughtful response your analogy was spot on. Might I suggest that you post a link to the free trade articles so that others might read for themselves what can happen when you throw open the doors without full consideration of all the potential pitfalls. I doubt whether some will read it because they have their own personal agendas, but it will help those that seek to better understand the economic plight we are in and the complexities we face in finding solutions.
Well said. Lottery is perhaps the only thing in question here and casinos….
Does anyone else see the self serving motives behind swan and burchall’s plan “for the benefit of all”.
The promotoers will make a(nother) fortune, foreigners will enjoy the best of Bermuda and locals will deal with consequences for decades. And wash pots too. Unintended consequences of trying to solve a problem using the same type of thinking that created the problem….downsize Bermuda, go local and get used to it.
nice post..thanks
Gee, I really really want to be a pot washer. Thanks PLP! Your on my side.
@ 2 Cents
Thank you for a thoughtful analysis of the talking points. My fear is that most will not read what you posted in its entirety.
If we are practical, we need to have both the generation of good ideas and the subsequent discussion before implementation.
Under the circumstances, Sir John has a definite perspective on what should be done but it is obviously not his sole domain to decide what gets done. To use a common phrase ‘he had his turn’ and did some things well and some things not so well. One of the suggestions that I do not understand is the suggestion for new condos. Given the current glut at all price levels, why would we build more instead of making the existing ones more attractive to willing buyers?
From my perspective, it is interestign to see teh comments about how the suggestions seem to be a selling off of Bermuda without any forethought for the future. I trust that this is because of the sense of urgency about our current economic circumstances and not a knee jerk reaction. Another surprise for me is that several of the suggestions (including lessening the restrictions on house purchases when one spouse is a foreigner, making it easier for IB senior execs to come to Bermuda, lessening restrictions on 60/40, waterfront development etc) have already been posed by the PLP and are in various stages of progress.
My public question to Sir John (and Mr. Burchall by extension) is whether they have discussed some of these ideas with the Premier and her Cabinet colleagues. The readers may remember that Sir John was in regular contact with the government when he wanted certain relaxations when he was trying to sell the condos on Parliament. There was very little public commentary on his behalf at that time.
Both Sir John and Mr. Burchall did an excellent show last nite. and Mr. Burchall answered LaVerne Furbert’s question as to why they are both doing what they are doing is because they want to see bda’s country moving up again.
& furthermore, why has the plp paid mr andrew brimmer (Principle Economic Advisor to the Ministry of Finance — http://plp.bm/node/4554 )all of the money that they have been paying him & this country is still in the financial mess that it is still in
That would be Andrew Brimmer born September 1926 and retired from the Federal Reserve in 1974? not that 86 year olds are not capable mind you must have been a friends of the Finance Minister Father…