Column: ‘The PLP Is A Tax And Spend Party’

March 11, 2019

[Opinion column written by OBA Shadow Finance Minister Nick Kempe]

The Government had a number of choices by which it could balance this year’s budget, mainly raise taxes or reduce spending. The PLP bristles at the “tax and spend” moniker, but that is exactly what they have done since they became the Government in 2017.

If you ignore the Sinking Fund contribution [as the PLP have done this year], the OBA handed over a Government in 2017/18 that was only $8M away from a balanced budget. Why has it taken two years and $60M in increased taxes since the OBA handed over the economy to close an $8M Government deficit? Well, as the PLP is a tax and spend Party, we should look at where all the new taxes are going.

Behind all the fancy rhetoric in the Budget Statement about efficiency [17 mentions] and reform [33 mentions], the Government is budgeting to spend the exact same amount every year for the next three years. No savings are expected to be found anywhere. Or, any savings will be consumed by increased spending. Of course, Government revenue mainly through taxes are budgeted to go up every year: tax and spend.

Employees. The Finance Minister made the claim that he would be unable to reduce Government spending without letting people go. What he failed to mention was that the PLP have increased the number of Civil Servants by 318 in the two years since the election. It would seem that the only growth plan the PLP has is to hire more Government employees.

Personnel Costs. Salaries, Wages, Employer Overheads and Other Personnel Costs have increased by $36.7M since the election. Of course, thanks to the OBA’s corrective actions to reduce the deficit [including the temporary compromise of furlough days], Government is now in a financial position to give civil servants a 2.5% pay raise. This pay raise, however, only amounts to approximately $9M, so the other $27.7M in increased Personnel Costs in two years is attributable to the additional 318 new hires.

Consultants. The OBA handed over the Government with a yearly consultant spend of $12.7M. This year the PLP is budgeting for $15.9M in consultants, an increase of $3.2M in two years. For reference, the PLP handed over a Government spending $35M on consultants in 2012/13. If spending discipline is not followed across the board it can quickly get out of control.

Travel. The OBA handed over the Government with a yearly travel spend of $2.0M. This year the PLP is budgeting for $3.4M in travel, an increase of $1.4M in two years. For reference, the PLP handed over a Government spending $5.3M on travel in 2012/13. The patterns across these increased cost lines are clear proof of the spend, spend, spend philosophy of the PLP.

The increased spend on new employee Personnel Costs, Consultants and Travel is equal to $32.3M. If these three line items alone were held to the levels at the time of the election, the $39M in increased taxes could have been avoided entirely and we’d still have a balanced budget by skipping the Sinking Fund obligation. Without the PLP spend, there would be no need for the PLP tax.

Or, without the unnecessary PLP spend on just these three items and keeping the existing tax increases, we would actually be able to dedicate $65M/yr on average to the sinking fund or early retirement of debt over the next three years. Bermudians would at least know that Government was sharing the sacrifice and that the additional taxes were being used to tackle the debt that will otherwise force higher taxes for many years to come.

This budget was characterised by a departure from fiscal discipline, has no stimulus for the economy and simply ignores the debt problem for the next three years.

- Nick Kempe


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Comments (15)

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  1. Ringmaster says:

    Another good column by the Shadow Minister. So 318 new Government employees all while the private sector shrinks. One of the most sickening comments made by the Finance Minister in this Budget discussion was his comment that “we can’t fire Government employees as where would they get another job?”. Firstly that is an explicit confirmation they are otherwise unemployable, and second they would have to search and apply just as all those hundreds in the private sector who lost their jobs have to do. It is the private sector who pay tax to support these PLP stated unemployable Government employees, who enjoy guaranteed employment, guaranteed pay, great benefits and gold plated pensions. Makes you sick.

  2. road rash says:

    Yup, PLP has created jobs – 318 at a cost to the taxpayer of around $30m! Thanks, I am soooo glad that my blood, sweat, tears and extra taxes have helped!

  3. watching says:

    and the OBA spends nothing on the people and hence are where they are.

    • Anbu says:

      They had nothing to spend “on tbe people” cause the plp spent it all. Keep spending money on the useless public sector tho. See how much better it gets lol.

    • inna says:

      ANother one with their hands out !!

      • wahoo says:

        We have become a welfare state only problem of course is that this government have no money to play Robin Hood like they promised Mr. Watching – he should call himself waiting, waiting for bus, waiting for welfare, waiting for education, waiting for trash truck, waiting for fintec blah blah blah. Keep waiting and watching.

    • Come Correct says:

      Pre 1998 they didn’t have to because there was a surplus of jobs for people to provide for themselves. Now everyone wants a hand out…sorry I think they called them hand ups.

    • 2 Bermudas says:

      You can’t keep buying groceries with your credit card, ding dong!! Hahahaha!!

  4. Sandgrownan says:

    Nicely written and clearly demonstrates exactly how bad the PLP are with the finances. Woeful.

  5. Redder Rose says:

    It is not the governments purpose to “spend on the people”.

  6. Merrick says:

    As a business owner employing thirty plus people (mostly Bermudians), I can remark that Bob Richards and pals raised my taxes higher, faster than either Paula Cox or the current regime. And my further remark is that neither party appear capable of bringing the civil service to heel.

    • inna says:

      Mate, you should be tankful that Bob only had to raise the taxes to the levels that he did.

      Could you imagine if your PLP didnt get voted out in 2012?? Your shop would have been closed up years ago!!

      Take that to the bank!!!

    • Toodle-oo says:

      As a business owner you really ought to know why your taxes went up under Bob. Does ‘inherited debt’ sound familiar ? And can you make the connection to the huge increases in taxes in this new budget ?
      The government has to find away to get the over $60,000 per person it owes somehow and seeing they’re incapable of even providing a stable platform for confidence in Bda to flourish they’re going to tax us to death instead.
      The future is bleak and the nasty medicine hasn’t even started to be dosed out yet and people are up in arms already !

    • Jussayin says:

      Really? You must not pay yourself or shareholders a dividend then. Small business’s are being reamed by this tax. Have you declared a dividend recently and legally?

  7. Basic Facts says:

    These facts are astounding. The OBA needs to highlight these facts over and over as it is the oppositions responsibility to question the government of the day on their spending to hold them accountable. I can understand that the government, PLP, OBA ….. doesn’t want to lay off civil servants and I thought they were decreasing it through attrition but come on, increasing the size of it by over 300 employees!!! I thought this country was trying to get a handle on expenses!!!