Minister: Further Economic Relief Measures
“The Government has implemented further emergency measures to assist businesses that have a pressing need for financial relief as a result of this pandemic,” Minister of Finance Curtis Dickinson said.
Speaking on the Unemployment Benefit programme that is already in place, the Minister said, “We will now have paid benefits to over 9,000 for a total cost of approximately $23 million. We expect further payments to continue on a bi-weekly schedule, which means another payment next Friday.”
Noting that the “restaurant and bar sectors have been particularly hard hit by a significant decline in sales volume and job losses,” the Minister said that the Government will immediately institute short-term relief from payroll tax to assist these sectors, so “during this quarter ending 30th June 2020, payroll tax will be set at a zero rate for the restaurant and bar sectors. Restaurants and bars will also cease deducting payroll tax from employees during this period.”
The Minister also announced new streamlined import duty deferment for business goods, saying that the “Customs Department will, with immediate effect, allow retailers and other commercial importers to apply for duty deferment for up to six months on imported business goods subject to a minimal surcharge.”
In addition, the Minister noted that it is proposed to “amend National Pension Scheme [Occupational Pensions] Act 1998 to allow for a mandatory suspension of employee and employer contributions for a period ending on 30th June, 2021.
“By providing such relief for employees and employers, participating employees will see their take-home pay increase by 5%, and participating employers will also benefit from reduced operational expenses [5% of payroll],” the Minister said.
“This is a temporary measure that will provide temporary relief to employers and provide additional income to employees.
“If the suspension of contributions is taken up across the private sector, it will provide both relief and stimulus to families and businesses. The stimulus to the economy will be generated if some of the saving is converted to consumer spending in the local economy and business investment in infrastructure and improvements.
“This is mandatory; however, employers and employees can make voluntary contributions should they wish.
“The Cabinet has recently approved a suspension on Social Insurance Contributions for employees and employers. This proposal will provide further relief to assist businesses and employees that have a pressing need for financial relief.
“Similar to the NPS suspension of contributions, this is also mandatory, and employers and employees can still contribute to the Contributory Pension Fund if they wish.
“These proposal are sensible and intend to ease financial burdens on employers and employees as we navigate this pandemic.”
Minister Curtis Dickinson’s full statement follows below:
Good afternoon.
My remarks today will cover three items: unemployment benefits update; the Economic Advisory Committee and further emergency measures that will be undertaken by the Government.
Unemployment Benefits
Last week I made a commitment that “…if you have been unemployed at the introduction of this program up through when you get re-employed, you will receive your benefit.”
Some folks may have interpreted that as meaning everyone would be paid by last week. That was our goal; we have made great progress on that front and continue to work to pay those persons who have not yet been paid.
The intended message was that:
- Everyone eligible will get paid, and
- You will be paid for the period for which you are eligible to be paid.
This means that, if you were unemployed for 6 weeks, you will get paid for those 6 weeks – even if you have yet to receive your benefit and are currently back to work.
That brings me to an important point. As we have stated previously, you are required to notify us when you go back to work. Some who believe they have not yet been paid their share may be tempted to withhold such information in order to “correct” what you think you are owed.
However, doing so would be in violation of the law and could result in you being overpaid. What is important is that we know the beginning and ending dates of your eligibility.
During last Wednesday’s press conference, I mentioned you could email us with details of your return to work. However, there is now an online form that should be used to confirm your eligibility period more expeditiously. Please visit www.bermudajobboard.com, follow the link at the top for COVID-19 Unemployment Application, then the link at the top for the Back to Work form.
Last week I advised that over 500 people had notified the Department of Workforce Development of their planned return to work.
This number has grown, and we expect that it will continue to grow as Bermuda enters Phase Two of its reopening. While economic recovery may be a long road ahead, over 1,400 individuals have now returned to work.
As mentioned earlier, we continue to make progress to resolve problem applications, and last week we paid 1,241 applicants for the first time and tomorrow we will be processing a mid-cycle payment to get funds to approximately 250 more.
We will now have paid benefits to over 9,000 for a total cost of approximately $23 million. We expect further payments to continue on a bi-weekly schedule, which means another payment next Friday.
Additionally, anyone having received a payment over the last week will receive an email tomorrow [provided you gave us an email address] informing them of some critical information on payment calculations. We encourage everyone to look out for this, review it carefully, and contact us if there are corrections necessary.
The COVID-19 Economic Advisory Committee
Last Wednesday, I advised that to appropriately navigate this crisis, I would seek the input and advice from all stakeholders in the community, and to assist I have established a COVID-19 Economic Advisory Committee.
This evening I am pleased to announce the members of the new COVID-19 Economic Advisory Committee.
I will chair of the Committee, and I have appointed the following 11 people to serve as members:
- Ms. Teresa Chatfield, Owner/Director, MEF Bermuda;
- Mr. Dennis Fagundo, Co-Managing Director, D&J Construction and President, Chamber of Commerce;
- Mr. Chris Furbert, President, Bermuda Industrial Union;
- The Honorable Patricia J. Gordon-Pamplin, JP, MP, Shadow Minister of Finance & Health;
- Mr. Marc Grandisson, President & Chief Executive Officer, Arch Capital Group Ltd and Deputy Chair, Association of Bermuda Insurers & Reinsurers [ABIR];
- Ms. Cheryl-Ann Lister, Chair, Bermuda National Anti-Money Laundering Committee;
- Mr. Michael Neff, Managing Director, Bermuda & International Wealth, Butterfield Group;
- Ms. Sylvia Oliveira, Chief Executive Officer, Wilton Re Bermuda and Chairman, Bermuda International Long Term Insurers & Reinsurers;
- Mr. Denis Pitcher, Chief Fintech Advisor, Government of Bermuda;
- Mr. Patrick Tannock, Managing Director, AXA XL and Chair, Association of Bermuda International Companies [ABIC]; and
- Mr. Stephen Weinstein, Chief Legal Officer, RenaissanceRe Holdings Ltd and Deputy Chair, Bermuda Business Development Agency.
At today’s meeting, the Committee discussed a range of organizational matters including the Committee’s Terms of Reference.
This Committee will provide insight and expert advice on how to protect jobs and stimulate economic activity during the economic crisis stemming from the COVID-19 pandemic.
I look forward to working with this team to identify and eventually implement a series of measures to enable sustainable economic growth and mitigate the social impacts of the pandemic.
Further Emergency Measures
I am pleased to report that the Government has implemented further emergency measures to assist businesses that have a pressing need for financial relief as a result of this pandemic.
Payroll tax – Restaurant and bar sectors
The restaurant and bar sectors have been particularly hard hit by a significant decline in sales volume and job losses since the COVID-19 outbreak began.
Accordingly, Government will immediately institute short-term relief from payroll tax to assist these sectors that have a pressing need for financial relief.
Therefore, during this quarter ending 30th June 2020, payroll tax will be set at a zero rate for the restaurant and bar sectors. Restaurants and bars will also cease deducting payroll tax from employees during this period.
This relief is intended to ease the pressure on Bermuda’s economy, and especially the pain being experienced by many Bermudians who work in this sector. We realise that this relief will result in a reduction of Government revenues.
Streamlined customs import duty deferment for business goods
I would like to take this opportunity to announce new streamlined import duty deferment for business goods.
Many viewers may recall that in the Budget Statement delivered earlier this year, I pledged that “… the Customs Department will ease the financial burden on retailers by making the customs duty deferral process more user-friendly. This will assist retailers with their cash flow as customs duty will not be paid upfront, but rather after they have sold at least a portion of their goods.”
In keeping with that commitment, the Customs Department will, with immediate effect, allow retailers and other commercial importers to apply for duty deferment for up to six months on imported business goods subject to a minimal surcharge.
Whereas import duty is normally payable at the time each import declaration is made to Customs; by deferring duty payment, the time of payment is delayed for up to six months.
Upfront duty payment can place a strain on a business’ cash flow.
This strain can be exacerbated by also having to pay overseas suppliers upfront or on limited credit terms, and with associated bank charges on each transaction. This additional cost and the administrative handling of each payment increases the cost of trading. Duty deferment will allow customs traders, in particular retailers and Customs Clearing Agents, to increase the efficiency of payment handling, increase cash flow and reduce costs.Long term duty payment deferral [more than six months] is also available in certain circumstances.
The COVID-19 pandemic has caused a dramatic contraction of the global economy and has been particularly devastating to small island economies, hitting the retail industry in Bermuda particularly hard. With the Shelter in Place Order and the mandatory shutting of most retail shops during Phase One, many retailers have been forced to make difficult choices, including employee furloughs or layoffs. The retail sector is anxious to find cost-cutting measures to help keep them afloat during this crisis.
Although duty deferment was not originally intended to address the COVID-19 crisis, by reducing import duty-related merchandise carrying costs, it is hoped that this Government measure might assist some businesses to cope with the economic effects of the pandemic.
Detailed guidance on customs duty deferment will be published on the Government Portal shortly. In the interim, all questions regarding Customs duty deferment may be sent by email to customs@gov.bm
Pension Suspension:
Last week, the Senate passed the legislation amending the National Pension Scheme [Occupational Pensions] Act 1998 to permit a person under the age of 65 who participates in a private, defined contribution pension plan or local retirement product, to voluntarily withdraw up to $12,000, from the period that the Act was brought into force until 30th June, 2021.
To provide further support to employers and employees during this unprecedented period it is proposed to amend the National Pension Scheme [Occupational Pensions] Act 1998 to allow for a mandatory suspension of employee and employer contributions for a period ending on 30th June, 2021.
By providing such relief for employees and employers, participating employees will see their take-home pay increase by 5%, and participating employers will also benefit from reduced operational expenses [5% of payroll].
This is a temporary measure that will provide temporary relief to employers and provide additional income to employees.
If the suspension of contributions is taken up across the private sector, it will provide both relief and stimulus to families and businesses. The stimulus to the economy will be generated if some of the saving is converted to consumer spending in the local economy and business investment in infrastructure and improvements.
This is mandatory; however, employers and employees can make voluntary contributions should they wish.
The Government is mindful of the long-term implications on a plan member’s retirement income in permitting such suspensions. However, this must be balanced against the immediate and urgent needs in our community that has resulted from this unexpected crisis.
Finally the Cabinet has recently approved a suspension on Social Insurance Contributions for employees and employers. This proposal will provide further relief to assist businesses and employees that have a pressing need for financial relief.
Similar to the NPS suspension of contributions, this is also mandatory, and employers and employees can still contribute to the Contributory Pension Fund if they wish.
These proposal are sensible and intend to ease financial burdens on employers and employees as we navigate this pandemic.
Finally I can confirm that later this week, to supplement reduced revenues and additional COVID- 19 related expenditures, I will execute the $150 million facility previously negotiated with local financial institutions. This will supplement an already executed $20 million credit facility with a local financial institution.
This borrowing capacity, together with current cash reserves and on-going tax receipts will assist the Government in taking the appropriate actions to mitigate the impact of COVID-19 in the short- term.
As the island and world deals with the Covid-19 pandemic, we are doing our best to provide timely and accurate information, and you can find more information on the links below.
- Live: Our continuously updated live blog here
- All: Our coverage of the Covid-19 pandemic here
- Official: The Bermuda Government website here
- World Stats: Live graph of all cases worldwide here
- Bermuda Stats: Chart of the Bermuda stats here
- Timeline: Visual look at the timeline here
- Comprehensive: Our new Covid-19 website here
