Finance Minister Curtis Dickinson Friday, February 21, said no new taxes would be imposed, but a decades-old 60:40 rule aimed at guaranteeing Bermudian majority ownership of on-island companies will be scrapped.
Unveiling his one-billion-dollar-plus annual budget to Parliament, Dickinson said that the 60:40 numbers would be reversed, allowing up to 60 per cent foreign ownership of island-based businesses in an attempt to boost overseas investment in Bermuda whose stagnant economy has seen the national debt climb to US$2.67 billion.
But he said the requirement for boards of directors to be at least 60 per cent Bermudian would remain.
“The objective of this initiative is to put money into the pockets of the approximately 75 per cent of the employees in Bermuda.”– Finance Minister Curtis Dickinson
Dickinson said legislation enabling the change will be tabled in the House of Assembly in the 2020-21 financial year.
He revealed that the total budget for the next year will be just over US$1.14 billion, a $30.9 million, or 2.8 per cent, increase over the original estimates for the last financial year.
“Revenues are forecast to rise by a modest 0.3 per cent, or US$3.7 million, and the current account balance, before interest on debt and capital expenditure, is budgeted to be a surplus of US$186.6 million.”
He said “a series of selective tax cuts” will be introduced to reduce payroll taxes for people earning less than US$96,000 a year, and bring the tax rate in the band up to US$48,000 “to its lowest level ever” — from four per cent to two per cent.
“The objective of this initiative is to put money into the pockets of the approximately 75 per cent of the employees in Bermuda.
“The cost of this tax relief will be partially offset by modest increases in the employee portion of the payroll tax for those earning more than US$96,000.”
The government department with the biggest cut is the Bermuda Police Service, which will have US$4 million trimmed from its previous US$65.8 million budget for the 2019-20 financial year, a six per cent reduction.
Immigration fees, however, will go up by five per cent, although international company fees will not increase, in order to maintain the island’s competitiveness.
He also said the Progressive Labour Party (PLP) government would “restructure” the Bermuda Tourism Authority (BTA) to “focus more directly on its sales and marketing role”, and “devise and introduce a slate of annual events that drives visitors to Bermuda and better reflects our claim to be a luxury destination”.
The BTA last week announced a record 808,242 visitors came to the island in 2019, even though air arrivals fell by six per cent to 191,417.
Bermuda has long tried to narrow the gap between cruise ship passenger arrivals and those coming by air. Those coming by air spend far more than those coming by sea.
Tourism Minister Zane DeSilva said in the House of Assembly last week after the tourism numbers were released: “Am I happy with these figures? Hell, no.”