Chamber Of Commerce Budget Response
The Bermuda Chamber of Commerce released a response to the 2021 Budget, saying that “increasing economic activity is a critical aspect of our island’s future success. ”
A spokesperson said, “The Chamber of Commerce would like to commend the Minister on the budget as he battles through these difficult times. We support the stated objectives of reducing the cost of living, increasing economic activity, realizing government fiscal prudence and moving quickly to implement policies to these ends.
“The cost of living is driven by four main components, the cost of materials and services overseas, the cost of labour and the cost of government taxation, all divided by the number of consumers. The costs of the inputs from overseas are not under our control. The costs of labour are rising due to the amended Employment Act, Pensions and changes to the Healthcare system.
“Bermuda’s population is continuing to shrink with several hundred less births than deaths for the last several years. As such the only lever available is reducing the cost of government. This budget sets the stage to start down that path and we support this fully.
“The Minister stated within the PreBudget Report that Zero Based Budgeting would form the foundation of this years budget exercise. We look forward to seeing the results of this type of introspective prioritization process where a critical eye can be cast over government functions. Shifting priorities and resources while reengineering processes and systems. It is assumed that the reference to Capital Expenditure to improve systems contained within today’s statement envisions just this process. This type of reengineering is necessary to provide a baseline if a Tax Reform Commission is to be successful.
“Increasing economic activity is a critical aspect of our island’s future success. Increasing activity can be seen as more companies, more employees, more residents, while preserving the companies, employees and residents we have. This budget does it’s part. Not increasing tax rates shows recognition for the already very high effective tax burden faced by local companies. Extending the payroll tax relief and duty relief to our distressed sectors are welcome ingredients for survival.
“This objective however needs to drive other government policies that are currently working at cross purposes. The statement refers to encouraging more residents, however the recent changes from the Residential Certificate Policy to the Economic Investment Certificate increases the barriers, reducing demand and new residents. This very policy introduced without consultation has thrown the Real Estate industry into disarray. It is having a predictable but opposite affect to that intended. Amendments to pension requirements for guest workers caused much concern and after much consultation and investigation is approaching a position similar to where it started but with the addition of bureaucracy.
“The changes to the Healthcare system proposed pre-Covid raise the cost of doing business in Bermuda and incentivized the hospital to reduce service levels. Increases in regulation have been shown internationally to stifle innovation and growth. Some of these are unavoidable due to international pressure, however many are of our own making.
“It is further important to recognize that Bermuda was in a position of oversupply due to the drastic reductions in population since 2009. Domestic economy woes can only be solved by increasing demand, artificially increasing supply by encouraging foreign entrants into the local market only exacerbates the situation.
“Government’s fiscal prudence is an essential component to meeting these goals. Reducing the cost of providing government services, moving as quickly as possible to a surplus budget, reducing debt levels is the measure by which this government will be judged in the coming years.
“We are on the precipice. Should we fail the consequences for the island will be dire. Many of us have experienced what it feels like to have a loan in your personal name, to be carefully balancing your spending some months successful other months falling behind. You can make it… as long as nothing gets worse, but hours get reduced at work and you’re in trouble. This is where we are.
“If there is any further shocks to the system, if tourism doesn’t recover, if the continued external attacks on international business are successful, we have no capacity to absorb the shock without serious repercussions.
“The Government has handled the Covid-19 pandemic very well. Conservative decision making, focused efforts, working well with the aid provided by the UK, have all placed us in an enviable position globally. However we can not rest now. Time is not on our side. We must move quickly to rectify our path of travel. We must look externally at our competition and seek that magnet which will draw companies and residents to our shores rather than looking internally with fear and building barriers. We must consult effectively and craft solutions that work.
“Today’s statement made frequent reference to collaboration. The Chamber of Commerce commits to continuing to work with government, building an environment within which business can be successful driving success for all of Bermuda.”
“The cost of living is driven by four main components, the cost of materials and services overseas, the cost of labour and the cost of government taxation, all divided by the number of consumers. The costs of the inputs from overseas are not under our control. The costs of labour are rising due to the amended Employment Act, Pensions and changes to the Healthcare system.
Bermuda’s population is continuing to shrink with several hundred less births than deaths for the last several years. As such the only lever available is reducing the cost of government. This budget sets the stage to start down that path and we support this fully.”
A fair and accurate assessment in my opinion.
“recent changes from the Residential Certificate Policy to the Economic Investment Certificate increases the barriers, reducing demand and new residents. This very policy introduced without consultation has thrown the Real Estate industry into disarray. It is having a predictable but opposite affect to that intended.”
The law of unintended consequences. A point I might have mentioned previously.
“We are on the precipice. Should we fail the consequences for the island will be dire.”
I could not agree more.
So many words but no substance. The chamber should be less politically sensitive and more direct about our reality. Being political correct is what got us to this state of emergency. Time for definitive action.