Premier David Burt presents first budget to Parliament

HAMILTON, Bermuda, Feb 16, CMC – Premier David Burt Friday said his ruling Progressive Labour Party (PLP) government would move away from “austerity” to “stimulus” as he unveiled a US$2.18 billion budget to Parliament that opened the door to increased foreign investment in this British Overseas Territory.
Unveiling his first fiscal package since the PLP swept to power last year, Burt told legislators “the results of July 2017’s general election are concrete proof of the rejection of trickle-down economics.
“This government accepts the economic realities of Bermuda today, but we are determined to forge a future that defies and shifts those realities and empowers this country’s citizens.
“This budget, as should be every budget, is about the people,” Burt said, adding that the payroll tax for the island’s lowest earners would be cut.
He said total expenditure for the year would be US$1.18 billion, an increase of US$2.5 million on the 2017-18 total, while revenues for the year are estimated at US$1.09 billion — $47.5 million or 4.6 per cent higher than the original estimate for the last financial year.
Announcing that his administration would move away from “austerity” to “stimulus”, Burt said a longstanding 60:40 rule, designed to guarantee majority Bermudian ownership, would be reversed, even though it would “face opposition from both sides of the political spectrum.
“We will increase access to capital for Bermudians by reforming the 60:40 rule to one that only requires 40 per cent Bermudian ownership to operate in the domestic economy. We need more economic activity in Bermuda and that means we must welcome investment from non-traditional quarters and not shy away from the competition it may create.”
He told legislators that “this government is determined to create the conditions and opportunities that usher the ‘left behind’ from the stands and side-lines to the playing field.
Bermudian entrepreneurs should not have to rely on their inheritance or banks that often refuse to lend to fund their ambitions. In the truly competitive marketplace, the consumer will always be the winner as all Bermudians want and seek lower prices for goods and services.”
Burt said employee-rate bands would be adjusted to give tax relief to people earning less than US$96,000 a year. The lowest employee band will reduced by 0.75 percentage points to four per cent.
Burt said the payroll-tax bands change would mean a couple earning $48,000 a year each, would get a US$720 annual increase in their take-home pay.
A worker who earns US$48,000 a year would be US$360 a year better off, those on US$36,000 a year would be US$270 better off, while those on an income of US$60,000 would also take home an extra US$270.
“Anyone making less than $96,000 will see a reduction in taxes; anyone earning more than $96,000 will not see any change in their payroll taxes,” Burt said, adding “this reduction in taxes will reduce the government’s payroll-tax yield by approximately $5.1 million.”
Burt said to reduce the cost of living, the government will lower the duty rate on textiles, which include linen and blankets and shoes.
Duty relief would also be given to sports clubs with youth programmes, which would include full duty relief on uniforms and equipment.
Burt also pledged that the 2018-19 financial year would be last in which the net level of debt, expected to stand at US$2.42 billion by the end of March, would increase.
“This level of spending in necessary in order for the government to implement its growth strategy while ensuring we have the facilities and equipment necessary to deliver public services.”
Sin taxes are also set to rise, with an increase in tax on tobacco “to reduce the inconsistency between duty rates on cigarettes and tobacco.
“Finally, the duty on wines will be raised by 30 cents per litre in April 2018 to achieve additional customs revenue.”
A proposal to tax commercial rents has been shelved, but land tax rates on commercial properties will go up by five per cent as a temporary measure. The move is expected to bring in an extra $15 million a year, although economic empowerment zones would be exempted.
Burt, who is also Finance Minister, said a new sugar tax on some products,  to be finalised after next month, would go ahead, even as he added that “healthy food items” would face a reduction in tax or have that tax eliminated altogether.
Duty on eggs and many vegetables, including potatoes, carrots and cauliflower, and fruit such as oranges and apples would be reduced to zero per cent from five per cent.
Unemployment is running at seven per cent in Bermuda.