Finance Minister Curtis Dickinson was greeted by a foot-stomping version of a round of applause as he rose to deliver his maiden Budget Statement in the House of Assembly this morning, where he told MPs that Bermuda recorded its first Budget surplus in 17 years.
The Minister also stated that the Island’s debt will fall this year for the first time since 2003 and that the Progressive Labour Party (PLP) government will not raise the debt ceiling in the upcoming fiscal year that starts on April 1, 2019 and runs through to the end of March 2020.
Other highlights likely to perk the ears of Mr & Mrs ‘Joe Average’ Bermuda was the plan announced to give mortgage relief to local families.
Retailers will also see payroll tax relief in the new fiscal year to protect and spur employment for Bermudians and the Minister pledged payroll tax relief to encourage the hiring of local entertainers.
MPs, stakeholders and taxpayers will have the entire weekend to fully absorb the host of fiscal points delivered in the Minister’s 59-page Budget Statement today.
On Monday, Premier David Burt and the Minister of Finance will host a post Budget news briefing, outside on the steps of the Cabinet Building, weather permitting, at 11:30am. In the event of inclement weather we will be inside.
Meanwhile, tax increases include a hike in land tax for owners of larger homes in Bermuda as of April 1, 2019.
Government will reduce tax on properties with an Annual Rental Value of up to $11,000 from 0.8 percent to zero, with a base charge of $300.
Home owners in the $11,001-$22,000 bracket will also be zero rated, compared to the 1.8 percent tax hike implemented last year, with a base charge of $300.
But the $300 flat rate will also lead to increased payments for home owners with the lowest-rated properties.
In the case of home owners with larger properties with ARVs valued at $44,001 to $120,000 or more, they will be hit with increases ranging from 3 to 5 percentage points. Homes in the mid-range with an ARV between $22,001 – $33,001 and $44,000, will remain unchanged. The current rate is 3.5 percent and 6.5 percent. The base charge on all of the higher properties will also be $300.
But owners of larger properties – with ARVs from 44,001 to $120,000 or more – will be hit with increases of between 3 and 5 percentage points.
The base charge on all the higher ARV properties will also be $300. But seniors will continue to be exempt on homes with an ARV of $45,000 or less.
In the case of families plagued by “mortgage pressures for hardworking Bermudians”, the Minister said Government will pilot a mortgage guarantee programme in return for reduced interest rates charged to mortgage holders, in partnership private sector banks.
That statement also prompted another round of foot stomping on the PLP side of the House.
The Minister noted that a government-backed mortgage lender will be created “to relieve pressure on public sector employees by providing them with reduced mortgage rates”.
“These two measures, combined with the elimination of taxes on mortgage refinancing, are projected to save $5,300 a year for the average family carrying a $500,000 mortgage,” said the Minister.
Other tax hikes include an increase on the tax rate for commercial properties, which will go up from 7 percent to 95 percent. The tax rate on tourist properties will also go up from 7 percent to 8 percent.
And as usual, the sin taxes will see the island’s smokers and drinkers dig deeper for their creature comforts.