Budget: Customs Duty & Sugar Tax Changes
The Government will extend customs duty exemption for investments in plant and equipment to the personal care and personal fitness sectors, school uniforms imported by local businesses for resale and aggregate imports used to manufacture concrete and concrete blocks, Premier David Burt said, adding that there will also be adjustments to the sugar tax and “items that may have a small amount of additional sugar, such as nutritional bars, low-sugar drinks, or non-dairy creamers, will see the customs duty rates reduced.”
In delivering the 2023/24 Budget today, the Premier — who is also the Minister of Finance — said, “Customs duty is the second-largest revenue source for the Government of Bermuda and is projected to generate $227,261,205 in fiscal year 2023/24. The Government has approved the following changes to customs duty this year:
Expansion of Custom Duty Relief for Capital Upgrades
“There is additional relief that the government will deliver to local businesses. For many years restaurants and retailers have benefited from customs duty exemptions for equipment used to upgrade their facilities. Investments in plant and equipment are vital for continued economic success. Restaurants that invest in more efficient equipment increase their productivity and, therefore, the health of their business, allowing them to continue to employ staff and serve customers.
“These are not the only businesses that need to constantly invest in the upkeep of their equipment to ensure they continue to remain viable. Therefore, as proposed in the Pre-Budget Report, the Government will extend this customs duty exemption for investments in plant and equipment to the personal care and personal fitness sectors. Spas, beauty salons and fitness centres serve locals and visitors alike, and we must support them to provide new and updated equipment for the enjoyment of their customers without the burden of additional customs duty when they seek to upgrade their facilities. Customs duty charges for upgrades to equipment represent a disincentive to business owners to invest. Business investment is key to economic growth, and this change will make it easier for our local businesses to invest for the future.
Duty-Free School Uniforms
“As an additional item of relief for parents of school-aged children, the Government will exempt all school uniforms imported into the country by local businesses for resale from customs duty.
Revisions to the Sugar Tax
“The sugar tax is something that this government pledged to implement in its 2017 election manifesto and kept its promise to do so. Mr Speaker, we all know the background of the consumption of sugar and the long-term health impacts on our local population. Bermuda has one of the highest rates of non-communicable diseases in the world, and it is incumbent upon governments to act to reduce these pressures over the long term. However, Mr Speaker, the application of the sugar tax via the customs tariff has led to many items which may contain minimal added sugar being subject to the sugar tax.
“Therefore, we will table in this session changes to the Customs Tariff Act that will ensure that the sugar tax is focused on sodas and drinks with significant amounts of added sugar, candy made primarily from sugar, and chocolate. However, items that may have a small amount of additional sugar, such as nutritional bars, low-sugar drinks, or non-dairy creamers, will see the customs duty rates reduced.
Elimination of Duty for Aggregate Imports
“Bermuda is running out of limestone aggregate. Typically aggregate is not imported into Bermuda, but as the need is increasing, it is important that we act to minimise the increase to construction costs. Therefore, the Government will eliminate customs duty on aggregate imports used to manufacture concrete and concrete blocks.”
For all our coverage of the 2023 Bermuda Budget click here and for ongoing live updates click here.
