- The following statement was released by One Bermuda Alliance MP Ben Smith, Southampton West
The economy of Bermuda has reached levels of real concern and we must look at the signs of the times. They are not good.
Drive from Somerset to St George’s and count all the ‘For Sale’ signs, some of which have been there for years. There is very little movement in real estate, which has an impact on construction, which in turn leads to less available work.
International business has been going through a transition with mergers, downsizing, outsourcing and closures, while fewer companies register to come to Bermuda.
Local business is under attack with the high cost of doing business and an increase in taxes. One of the hardest-hit areas is retail, which is a word used to describe everything from clothes to cars to construction and even petrol.
The Government says the retail sector needs to change with the times and it is up to retail to solve the problem — yet in doing so, the Government ignores that a failing retail sector has a significant impact on the lives of thousands of Bermudians.
An increase in taxes has had a direct effect on this sector, which is in a battle for survival against outside companies that don’t have the same financial burdens.
Remember, a local retailer has the following costs: wages, social insurance, pension, payroll tax, health insurance, rent, internet, electricity, city tax.
In addition, local retailers must pay shipping costs and import duty. The latter is paid upfront even before the goods imported are sold.
If after all that a retailer manages to make a profit, which could be used to sustain jobs and reinvest in the business, the Government has imposed a dividend tax that directly affects small Bermudian companies.
While the Government states that retail needs to come up with the times to compete with online overseas companies, the difference in Bermuda is that we are an island with no manufacturing, so everything must be imported and virtually everything imported is subjected to tax.
The other difference is that whereas in larger countries those who lose jobs in retail can find employment elsewhere, the same cannot always be said for Bermuda.
Where will they find a new job here in this present economic climate? Approximately 3,000 Bermudians are employed in retail.
We have an ageing population and a low birthrate, meaning we have a growing segment of Bermudians who will not be able to contribute as much economically, but who will need to be supported by the remaining, shrinking workforce.
This situation is being exacerbated because young people are deciding to leave Bermuda to make a life overseas where there are more opportunities.
One of the impacts of a slow economy and shrinking workforce can be seen by the impact on charities.
We have just seen the Centre on Philanthropy being forced to close because of financial pressures, but more people are also finding themselves in need, which means more people are relying on charity.
Charitable organisations in turn are increasingly relying on international business to provide the funds, even as those same international businesses are subject to mergers and acquisitions that reduce their charitable donations. We are asking international business to feed our hungry, clothe our needy, build low-cost housing, sponsor our causes … basically give, give, give while saying things publicly that make them feel unwanted and, in some cases, even hated because of their skin tone.
Most people have seen the movie Titanic. After the ship hit the iceberg and began to sink, a decision was made not to tell the passengers to avoid panic setting in, and the band was told to keep playing.
Then the wealthy were escorted to lifeboats so they could evacuate as the ship continued to take on water.
Relating this scene to Bermuda, we must be aware that the wealthy, if needed, have a plan and a lifeboat, the workers are already underwater and the middle class is quickly finding itself up to its necks.
Is there a plan other than taxing, watching retail die and hoping for someone to bail us out while we tell them we don’t like them? I do not see one.
• This opinion is based on a speech delivered in the House of Assembly on January 31, 2020