Chamber Of Commerce Response To Budget

February 19, 2016

“Our initial thoughts are that the budget was well thought out and continues progress towards improving Bermuda’s finances” however “measurable improvements will not be felt any time soon,” President of the Chamber of Commerce John Wight said following this morning’s [Feb 19] budget.

Mr Wight said, “We were pleased with this sensible budget, which addresses the urgent needs facing the economy in Bermuda. The business community appreciates the approach of giving a long notice period regarding tax reform changes that businesses will need to plan for.

“We also strongly encourage Government to engage stakeholders as part of a collaborative and consultative process before these changes are implemented.

“We stated earlier this week that the primary focus of the 2016 / 2017 budget needs to be on reducing the deficit so that Bermuda will be in a position in the next few years to work down its debt, which is budgeted to be $$2.2 billion at the end of 2016, exclusive of unfunded pension and health liabilities.

“It is very encouraging to see in the budget that the surplus before debt servicing costs is estimated to be $75 million. This is the first time in many years that Bermuda’s finances will be in surplus, rather than deficit, before debt servicing.

“The interest on debt and sinking fund contributions totaling $187.4 million in the coming year make it impossible to provide all the services that we need Government to provide, and thus working down the debt is critical to Bermuda’s future.

“We were pleased to hear the correlation between the number of people residing in Bermuda, and economic growth. Economic growth, or GDP, is a function of the change in productivity and the change in the number of people in Bermuda. An ageing population in Bermuda and fewer Bermudians entering the workforce than those retiring is a fact and a trend that is worsening and worrying.

“There needs to be greater discussion in our community about how important it is to have more people live and work in Bermuda, and how we do this to benefit Bermudians.

“Our member organizations of the Chamber of Commerce continue to struggle. There is no opportunity for real growth until they have more people in Bermuda to sell their products and services to.

“The Minister outlined his plans for tax reform based on advice from tax advisors from the Caribbean Regional Technical Assistance Centre “CARTAC”. CARTAC operates as a regional resource centre of the International Monetary Fund, and advises countries in meeting the standards of economic and financial governance expected of them by their citizens, and by domestic and international advisors.

“Tax reform is long overdue. The Minister’s decision to remove tax loopholes that are illogical and unfair, along with a progressive tax system that recognizes that those who earn higher wages should bear a greater brunt of taxes than currently, is commendable.

“Our hope and expectation is that the cost to employers of tax reform, including the increase in payroll tax from 14.5% to 15.5%, which commences April 1, 2016, will not be too punitive.

“The Chamber will have more to say on the budget when it has the opportunity to study it further, however our initial thoughts are that the budget was well thought out and continues progress towards improving Bermuda’s finances. Measurable improvements will not be felt any time soon however.”

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Comments (19)

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  1. archy says:

    It seems certain that we will have a 5 percent services tax, we have a per percent increase in payroll, we have increased duties to pay – and Govt failed to meeting its 15 percent target of cost reduction it said it needed. The OBA started off with austerity budgets – now we have a tax tax tax budget. How much can the private sector take? Chamber – why are you not highlighting this?
    And, if you read the budget carefully, you will see how much the crash in oil prices has contributed to GDP growth – where would we be if oil prices had not slumped – where will we be, if they go up again?
    Oh and by the way, oil prices have gone down for the consumer, so the Govt increased duty … cheers.

  2. jrsmith says:

    chamber of commerce no comment on GST?

    • archy says:

      or the effects of the oil price crash; or the infrastructure projects over the next five years (did anyone see that cost of the causeway – $100m), the unified customs rate, Govt progress on reducing spending (they got half way), the lack of attention paid to further cost cutting…

  3. Family Man says:

    Well thought out?

    a 7% increase in payroll tax and a new 5% service tax that companies will incur on audit fees, legal fees, corporate secretarial services, rent, catering ..

    I’ve already heard of one captive manager considering moving the accounting work to the Philippines and just keeping the review function and local Directors in Bermuda.

    • Truth is killin' me... says:

      @ Family Man…I told you to say India not Philippines! Get the script right and the fear mongering correct or I’m voting you out the next time around!!

      • The Original Truth says:

        Sounds real to me. Just it’s most likely not the taxes that’s doing his figures in. It’s probably why the captive manager is feeling the pinch in the first place. Taking advice from the same employees who put them in the mess. Not a good idea.

        Though I do agree Truth is killin’ me India is a much better place for sourcing an accountant. Just some business people make unsound decisions that sound odd to those who know better.

  4. Jerry says:

    Wow that 14 years of PLP is costing us heavy

  5. Only in Bermuda says:

    Chamber Of Commerce Response…. “fewer Bermudians entering the workforce than those retiring is a fact and a trend that is worsening and worrying.

    Why because this is the only place in the World that overlooks it’s people/Bermudians and bestows jobs to XPATS on a silver plate with the free OBA bumper sticker. More Bermudians unemployed under the OBA clowns and more XPATS coming in.

  6. Tom Cooke says:

    2% corporation tax… it was floated a couple of yrs ago… 2%…. I know I would bug out… but if we do nothing… where will we be in 2019. ..

  7. Tom Cooke says:

    IB would bug out… spellchecker. .

  8. Coffee says:

    It seems to be very difficult for the Chamber to Be honest !

  9. Keepin' it Real!...4Real! says:

    Wait till after the AC…you think it’s bad now..? It’s gonna be a slow death people’s.

  10. Need Peace says:

    We need more people here?? Let’s start by bringing our Bermudian professionals back home to work instead of foreigners. Isn’t that the same thing? Or do they HAVE to be foreigners? SMDH!

  11. JUNK YARD DOG says:

    Question ::: Sit 4 family members around a table in a room and lock the door.

    Each family member will have $1,001.oo with which to trade with,
    at the end of the day who will be the winner?

    Answer ::: None of them

    WHY ? The door was locked.

    Question ::: Is Bermuda that locked room ?

    Go Figure !

  12. JUNK YARD DOG says:

    $800, Ask Bernard Madoff.

  13. some beach says: