Cabinet Approves 2.4% Increase For Pensions
“The Cabinet approved a further 2.4% increase for seniors’ pensions in line with the inflation rate,” Premier and Minister of Finance David Burt said in the House of Assembly today [July 19], adding that “when the House of Assembly returns in September, this government will table that increase in pensions to keep our commitment to Bermuda’s seniors.”
The Premier’s full statement follows below:
Mr. Speaker, today, I rise to reflect on seven years of this Government serving the people of Bermuda and the work we have done to create a fairer and more equitable island through the work of the Ministry of Finance. From the outset, we promised to make our tax system more fair and equitable, not as a political slogan but in recognition that our unjust, unfair tax system put the heaviest burden on our poor and our working-class Bermudians.
With that at the heart of our vision, we have worked tirelessly to provide relief to the Bermudians who needed it most, reducing their tax burden and shifting it to those who could afford to pay their fair share. Mr. Speaker, when this Government presented its first budget statement in 2018, it reflected the needs and desires of the average Bermudian. It reflected the concerns of single parents struggling with the cost of daycare, families whose incomes barely covered their monthly expenses, students unsure of their future in Bermuda, and seniors worried about their dwindling savings. It was them who shaped our vision, and it was them to whom our commitment was clear: to present policies that served all Bermudians, not just a privileged few.
Mr. Speaker, over the past seven years, we have delivered tangible relief to Bermudians while investing in critical areas such as education, affordable housing, infrastructure, support for our seniors, economic development, and social programmes for our young people.
Mr. Speaker, under this PLP Government, working people in Bermuda pay significantly less in payroll taxes than they did under the OBA. In 2016, Bermuda’s workers paid the highest payroll tax in history—why? Because the then OBA Government shifted the burden of taxes onto the backs of employees rather than employers. We were elected to make our tax system more fair, and that is precisely what we have done.
Over the last seven years, we have reduced payroll taxes for workers in Bermuda to the lowest level in history, with some seeing their taxes fall by 90%.
Mr. Speaker, workers in this country making $48,000 a year paid $2,280 per year in payroll taxes before we were elected—today, they are paying $240 a year. That is a 90% cut for workers who are challenged to make ends meet. Think about what it means to a family of four or a single parent working more than one job—they get to keep more of what their hard work has earned.
Mr. Speaker, the median income in Bermuda is $66,000, and workers earning this amount have seen their payroll taxes fall by 43% since we took office, saving the average family $2,800 a year in taxes.
If Payroll Tax rates had remained at the levels set by the One Bermuda Alliance, the average worker would have seen an additional $5,000 deducted from their paychecks, worsening the impact of global inflation on Bermudian families struggling to make ends meet.
Mr. Speaker, it is a fact that working people in Bermuda are paying less to the Government in taxes, carrying less of the unfair tax burden the OBA placed on them, and getting to keep more of the money they earn to spend on the things they need for their families. That is the difference when your ethos is focused on doing the best you can for the working people of Bermuda and not just for the rich and privileged.
Mr. Speaker, in 2018, we also closed the loophole that allowed partners of professional services firms and owners of large retail or supply stores to receive dividends free of taxation while the workers in those businesses paid taxes on their income. Since then, the country has benefited from additional revenues that have enabled this Government to invest in additional services for the most vulnerable in our community.
The Progressive Labour Party has always been committed to fair taxation, and this Government has changed the status quo by delivering fairness to an unfair and unjust tax system, ensuring that working people pay far less and high earners pay their fair share.
Mr. Speaker, we are also proud to have reduced payroll taxes for all local businesses and eliminated payroll taxes for self-employed fishermen, farmers, and employees with disabilities. These tax reductions have provided relief to local businesses, enabling them to continue operations, hire more workers, and improve their bottom line. Additionally, we introduced a one-year tax holiday for new local businesses to further support local businesses and encourage job creation. For larger local businesses and all international businesses, we introduced the “new hire relief,” which meant that if companies hired more workers in Bermuda, they would not pay additional employer payroll tax.
The result, Mr. Speaker? Record tax revenues, strong economic growth, 40-year low unemployment, more Bermudians working in international business than ever, and a fairer, more balanced tax system that supports Bermuda’s workers.
Mr. Speaker, we have reformed more than payroll tax. As Bermudian homeowners struggled with rising interest rates, this PLP Government said that you should not be locked into a high-interest mortgage because you cannot afford to pay the Government tax to move your mortgage to a bank offering you a lower interest rate. What did we do? We eliminated the tax on mortgage transfers up to $1 million, which now sees Bermudians getting lower mortgage rates and lower monthly payments due to this Government’s changes. This change benefits Bermudian homeowners and is true to our ethos of a fairer Bermuda.
Mr. Speaker, regarding customs duty, this government eliminated duty on 33 essential goods, school uniforms, aggregate for construction, sporting clubs & youth programmes, and nursery equipment.
One of the most significant actions taken on customs duty was when gasoline prices hit record highs worldwide in 2022, but not in Bermuda. Why Mr. Speaker? It is because this PLP Government took quick action to freeze the price of gasoline so that families, small businesses, and tourism ambassadors would not have to pay more at the pump.
When it came to vehicle licensing costs, we acted there, too, Mr. Speaker. No one thought that any government would reduce fees at TCD, but we did—reducing car licensing fees by 10%.
Mr. Speaker, in 2017, our seniors felt unheard and unsupported. They had been told that “money doesn’t grow on trees” and made to feel like their contributions to this island were unappreciated. We rejected that approach and pledged to do right by our seniors to ensure their pensions kept up with the rate of inflation.
Mr. Speaker, promise made, promise kept. As we said we would in 2017, this Government has increased pensions to keep pace with inflation, ensuring that our seniors can live with dignity.
Mr. Speaker, I can share with Honorable members and the people of Bermuda that on Tuesday, the Cabinet approved a further 2.4% increase for seniors’ pensions in line with the inflation rate. When the House of Assembly returns in September, this government will table that increase in pensions to keep our commitment to Bermuda’s seniors.
Finally, Mr. Speaker, this Government has successfully designed Bermuda’s first corporate income tax in line with the Global Minimum Tax, which will yield significant benefits for Bermuda’s future. This work was not easy, but it demonstrates the collaborative approach that has maintained international business confidence in Bermuda, yielding strong economic growth in our primary economic sector.
The forthcoming revenues from this tax will enable the Government to reduce taxes for workers and businesses even more, support universal healthcare, and stabilize our pensions for the future. In the end, this means that the Government will be able to significantly reduce the cost of living, which all Bermudians should support.
Mr. Speaker, some listening may be sceptical and feel that they cannot wait for the revenues from this new tax, as they need more relief now. What I can say to those who are looking for hope is to reflect on this Government’s record. We have shown, time and time again, that we are not afraid to make bold choices on public finances that benefit the working people of Bermuda.
Mr. Speaker, I give a commitment to this Honourable House today that over the next two months, this Government will examine what further actions it can take, due to improving budget performance, to further alleviate the financial strain affecting families in Bermuda.
Mr. Speaker, in conclusion, the past seven years have been marked by significant changes to taxes in Bermuda that have benefited working people. While we have not been perfect and recognise there is much more to be done, this Government remains unwavering in our core values, aims, and objectives set out by those who came before us.
Mr. Speaker, the last few years of recovery from a once-in-a-century pandemic have been difficult for us all. But the people of Bermuda should have no doubt that this Government will continue to reduce the burden of taxation for working people, reduce taxes to tackle the cost of living, and continue to reform our system of taxation to build that better and fairer Bermuda that the voters of this country put their trust in us to deliver.
Thank you, Mr. Speaker.
