Chamber: Initial Views On Budget Are “Mixed”
“Our initial views are mixed,” Chamber of Commerce President John Wight said following today’s Budget, as “increased company payroll taxes and rolled-back tax concessions to restaurants and retailers mean that these businesses will have no choice but to pass on these costs to consumers, or reduce their workforce.”
“In addition, Chamber members would find their sacrifice more palatable if Government were seen to have done more to share in this sacrifice, by reducing the cost of the civil service,” the Chamber President said.
Finance Minister Delivers Budget
Introducing a new Financial Services Tax, payroll tax changes, and adjustments to customs duties were a few of the financial initiatives revealed as Finance Minister Bob Richards delivered the 2017 Bermuda Budget in the House of Assembly this morning.
In addition, the maximum taxable salary level will be raised from $750,000 to $900,000, land taxes for this upcoming year will remain unchanged, while duty on cigarettes, tobacco, beer, wines and spirits will be raised.
In explaining the changes to the payroll tax system, the Minister said, “In the situation where an employer is currently passing on the maximum amount of 6% to an employee, an employee earning in the lowest band [1] will receive a tax cut of up to $600 p.a. in 2017/18.
“The next band [2] provides for a tax cut of $600 – $720. Band three provides for a tax decrease of $720 to an increase of $1,713. The top band provides for an increase of $1,713 to $29,000.”
Speaking on concessions, the Minister said, “In fiscal year 2014/15 non-legislated concessions to hotels, retailers and restaurants totaled approximately $31 million. The roll back of these concessions was started in fiscal year 2015/16 and in this fiscal year Government will fully withdraw all such concessions.”
The Government will also be introducing a new tax to be called the Financial Services Tax which will be for banks, local insurance companies and Money Service Businesses.
“When applied to banks the tax will be calculated as 0.02% of assets,” the Minister said. “The tax as applied to local insurance companies will be a tax on gross premiums earned, excluding premiums from health insurance.
“The rate of tax will be 2.5% of non-health related gross premiums. Finally the rate of tax for the Money Service Businesses will be 5% on their aggregated incoming and outgoing transmission volume.”
Chamber’s Comments
Mr Wight said, “The Chamber will be reviewing the Budget over the weekend in detail. Our initial views are mixed. The Ministry had a very difficult job in addressing the many economic challenges facing Bermuda.
“There is no doubt from economic data gathered over the past year, that Bermuda’s economy is moving in the right direction. Tourist arrivals are up, retail sales are up, and virtually every index supports a growing economy, albeit Bermuda needs more people to share in this growth.
“If Bermuda’s finances were strong, and the international business world was stable, this would be a much easier budget to prepare. Regrettably that is not the case. Bermuda is facing unprecedented risks, principally from beyond our shores.
“Potential tax reforms from the new US President and his administration, and Brexit are the two most pressing issues amongst many. We do not yet know the extent of the associated risks, but we know that their consequences are concerning.
“With a current debt of $2.5 billion, projected to increase to $2.8 billion at the end of the 2017/2018 year, and a budgeted deficit of $135 million in 2017/2018, achieving the Government’s objective of balancing the budget by the end of 2018/2019 will be a challenging one.
“Citing the $500,000 daily interest cost on Bermuda’s debt certainly highlights how critical it is to balance Bermuda’s budget, and start paying down our debt, so that issues such as public education and care for the elderly can be funded for the benefit of the many Bermudians who need to benefit. Until the debt starts to get paid down, we will be challenged to do this.
“Shared sacrifice was a concept that underpinned the message delivered by the Minister; it is essential when the burden of increased taxes and new taxes is levied on individuals and companies.
“Progressive tax reform is a feature of the Budget which the Chamber supports. Those individuals earning more in our community should be paying a higher tax rate than those who earn less. This is fair and equitable.
“If all stakeholders shared this burden, individuals and businesses would understand that each of us needs to do our part in achieving Bermuda’s critical financial goals. The caution that we have that must be monitored closely, is any adverse effects that a progressive tax model has on international businesses, the key driver to our economy.
“One area of concern for the Chamber is that this budget will be inflationary for Bermudians. Those people who will benefit initially from paying lower payroll taxes, and in fact all residents, will start paying more for goods and services.
“Increased company payroll taxes and rolled-back tax concessions to restaurants and retailers mean that these businesses will have no choice but to pass on these costs to consumers, or reduce their workforce. Neither of these is good for Bermuda.
“The Chamber is disappointed that 2016/2017 Budget objectives to broaden the tax base, such as adopting a Goods and Services Tax and addressing the self-employed $40,000 notional tax base, were not addressed during the past year and were only introduced in the 2017/2018 budget.
“In addition, Chamber members would find their sacrifice more palatable if Government were seen to have done more to share in this sacrifice, by reducing the cost of the civil service.
“One issue that was not addressed in this Budget, and which is critical to Chamber members, is the need for a national discussion on how to create more jobs in Bermuda, the need to adopt laws that make it more attractive to start or bring business on island.
“We are concerned about facing a growing tax burden with limited prospect of real growth for many Chamber members, which can only come if there are more people in Bermuda to whom they can sell our products and services and the current residents have greater disposable income.
“The Chamber will have more to say when it has an opportunity to study it further,” Mr Wight concluded.
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This is an election budget and the Minister is being careful not to affect people in the civil service. What the average man on the street is going to see is more money in their pocket and they’ll just stop at that. Bob Richards still hasn’t figured out that these same people will never vote for him anyway, so I’m not sure why he’s trying to please them? Meanwhile, the rest of us in the private sector are bankrolling the civil service by taking yet another hit on the chin with increased taxes from all angles!!
The civil service is likely already to be anti OBA after the shenanigans they have tried to pull the last 4 years. Bob has basically ruined the OBA’s chance of reelection with this horrible budget.
The civil service along with Jason Hayward and Chris Furbert have never been pro-OBA. Let’s get that fact out there right now. Bob Richards could have given everyone in the civil service a tax break and a raise and they still wouldn’t vote OBA. lol
So he should have done what was necessary from the get go. Instead it’s been 4 years of soft touch.
Correct
Chamber logo looks like an election slogan.
Mmmmmmm
Boo hoo hoo
Wow you people act like civil servants don’t pay taxes just like you… private sector bankrolling the civil service LMAO
…and where does the CS money to pay taxes come from? the private sector… so they re paying taxes with taxes… do you get it now?
You pay for a SERVICE, which is performed by HUMANS, not ROBOTS. These humans, in turn, get paid for the service that they provide for you. Wow, some people really are slow.
You do understand civil servant pay IS tax money from
How are they paying tax dollars when they are being paid by tax dollars?….
This is the type of thinking behind how the country was run for those disastrous 15 yeas. Moronic.
Why is the payroll tax capped at $900k?? Why are those making the highest income getting a payroll tax break? This is insane!
Can’t tax our way out of this, must cut cost. Lovely chess game you must admit. OBA on thin ice; too many misfires – Airport roll-out, path to citizenship, pepper spray. Welcome to the rough side of the mountain. Elections in Bermuda are yours to lose; PLP just have to sit and catch this baby.
All examples of fallout from opposition campaigns of misinformation and obstruction. Swing voters are not stupid. They will be able to judge relative culpability.
“Chamber”.
John Wight is the Minister of Finance?
Bobs trying to get us buy on a daily basis and Wight want’s to pad his Pander.
The Chamber represents………………….
Happy it’s almost time for a March…….
Terry, you are clueless.
THe civil service has been reduced while the restaurants and retail stores have enjoyed concessions. Now it’s time to participate in shared sacrifice Chamber of Commerce. The AC is here, make back the money from them.
Bermuda’s civil servants. The only people in the modern world with guaranteed jobs. And still they complain.
Were the OBA there at 5am today? Or today they weren’t “ready to work” lol bunch of fakes !!!
Jason like the fake protesters marching for tweed I mean genivive.
I think the pay for Ministers should be reduced to 35K a year. Let’s see how many stay because they love Bermuda and want to serve their Country.
Well that’s how it used to be until the PLP got in.
The Chamber comments are interesting.
They supported the airport redevelopment project, which requires government to replace $20m in revenues that would have been otherwise available.
Where does the Chamber want government to get the $20m from?
A genuine financial analysis would also show that the government has been subsidizing the privately owned hospitality sector to the tune of up to $30m for the past several years.
Are members now crying foul since they are losing their tax payer funded subsidy?
Clearly from cutting the civil service.
Medicinal marijuana sales and or importation tax is a trove of money that needs to be realised.
As would the tourism that would no doubt increase from it.
Also …This may sound funny…But let’s seriously consider a bordello in each parish.
Within walking distance twenty four seven…The revinue from that would float your boat for sure.
Just think of all that taxible revinue!
Why is it that every government refuses to tax rents. There are people in Bermuda collecting in excessive of 25 rents per year. Properties are paid for..all they have is repairs & maintenance. Easy to administer . Look at ARV’s. Require all leases to be register with Government. Send out automatic invoices.
Any arv’s not register as a rental unit investigated and fined if necessary.
Dividends is another are were both governments avoid. Local dividends could be taxed a source. Harder to deal with foreign.
Are you nuts? They need to remove dead wood, trim the fat, drain the swamp, think up new revenue streams.
Bob has given a budget that is best reserved for the PLP. Progressive taxation and the transfer of wealth is a progressive goal. The problem is that markets go in cycles. After 14 years of left of center Government, the OBA was elected to drive a business agenda. Austerity. Concessions to business. Investment in infrastructure. Reduction in the expenses (read: headcount). Hard cold business steps to reduce the deficit and come at a human cost. Of course that would mean a single term in Government. But so what? The COUNTRY would be the better for it. Would a PLP Government rehire people who were laid off? Would the PLP knock down hotels built on the back of concessions? Of course not. They would refocus on social programs, hopefully now with the money to pay for it. By playing progressive, the OBA has missed an opportunity to get tough on its overspending problem. We have made ourselves less attractive to businesses considering where to locate staff. Our existing private sector will cut their costs (read: headcount) to make up for the increased expenditure. So when your private sector cousin loses their job – be sure to support them Civil Service worker. After all, they lost it supporting you.
It does not matter what tax gets implemented or raised , the banks and retail sector does not normally absorb the increased cost, it gets passed on to the consumer. While the average consumer is left with far less money to raise their children and even operate day to day. No raises in pay since 2008. That is unacceptable! Healthcare Rates, bank fees, groceries, fuel charges per litre, water. Just to name a few. It is not the Bermuda we used to live in. Unsustainable. It is plain HARD to exist out here!
Still struggling to see why more Sage recommendations weren’t implemented. If anyone can name a jurisdiction of 60,000 with more than one post office I’d be surprised and yet we still have them all over the place. To add insult to injury the service is still appalling with perhaps two deliveries a week and none if showers are forecast. As to umpteen primary schools still existing when any sane parent long since abandoned the government system defies logic. Apparently there are schools with classes in the single digits! All this should have been done in 2012 when the OBA won back power. Sure, we would have had protests and marches but we had those anyway!
I was curious so looked up Antigua quickly. Apparently they have five post offices, one of which is at the airport and one of which is on its sister island Barbuda. So there’s definitely a case for further reductions in Bermuda.
Cut the civil service means you cut Bermudian jobs bringing economic disruption to Bermudian families. Does the chamber really that reduce Bermudian spending in the economy is going to do their economic prospects any good? Or does it believe that spending habits of Bermuda’s foreign work force is what is keeping the Bermudian economy afloat and that in the long run more and more Bermudians leaving the country to become economic refugees in another man’s country(England) is good for Bermuda’s economic development?
Bermuda doesn’t have a central bank, Alvin, so we can’t continue to run deficits because we can’t just print money like the US and other countries. Yes, the civil service spends money which contributes to the economy but really it is fake because eventually the quicksand reaches your nose.
Why not tax air – everybody needs it, so everybody would have to pay!
No one asks the question whether $900m or $1,000m is enough for Bermuda. We keep taking more and more from the private sector. The response will be job cuts in the private sector. The proposal to tax local financial services is a double hit. Tax the company (new tax), and then increase their payroll tax (increased tax).
Is this supposed to lead to job growth? (Strong hint: it will not)