Premier David Burt will host a post-Budget news conference on Monday, following his first-ever Budget Statement on the floor of the House of Assembly on Friday.
The lead-time to the planned conference, scheduled at the Cabinet Office at 2:30pm, will no doubt allow residents and stakeholders alike, to digest the full contents of the 48-page fiscal plan.
While the overarching theme focused on the Government’s bid to boost the economy with foreign investment, on the flip side he warned: “There is nothing more dangerous to a society than inequality.”
“This Government is seeking to ensure that the gap between the advantaged and disadvantaged is reduced, by expanding the economic pie and investing in those who have been on the sidelines watching others prosper.
“To have a harmonious society, the policies of government must benefit the many and not the few,” he said.
Unlike his predecessors, the country’s youngest-ever Premier pushed forward a plan to break down barriers inhibiting new growth in today’s global market.
The PLP government will put an end to the 60:40 rule that guaranteed majority ownership of local businesses by Bermudians.
Moving forward, only 40 percent Bermudian ownership will be required.
The Government also plans to examine ways to expand “the types of banks that can operate in Bermuda”.
Admittedly, he said he anticipates the relaxation of the 60:40 rule “would face opposition from both sides of the political spectrum”.
But he said: “We need more economic activity in Bermuda and that means that we must welcome investment from non-traditional quarters and not shy away from the competition it may create.
While many Bermudians were “resistant to the idea of foreign capital as it has never benefited them”, he said: “Foreign investment is not the enemy.”
“The true enemy of all Bermudians who feel marginalised is an unbalanced and unfair economy that allows the haves to get richer while the have-nots fall farther behind, not foreign investment.”
The upcoming fiscal year that starts on April 1, will be the last year when the when the net level of debt, which is expected to stand at $2.42 billion by the end of March, will increase.
At a time when “it is clear that our economy is stagnant and therefore unable to provide for those in our country”, he said the question we must ask ourselves is “How are we going to fix the problem?”
And it was clear that the PLP would move away from “austerity” to “stimulus”, something the premier said the former administration did not do.
“When governments follow a programme of austerity, they cut the number of staff; they do not invest in maintenance programmes for buses; seniors and the poor pay more for services; and new trash trucks are not purchased,” said Premier Burt.
“When the previous Government tried to cut its way out of a recession without investing for the future, we ended up with mouldy schools, unreliable public services, crumbling infrastructure, a stagnant economy and increasing economic inequality.”
Following the PLP’s landslide victory at the polls in July 2017, he said: “The people of Bermuda voted for a new way – a new approach.
“They voted for an end to austerity and for a government that committed to putting Bermudians first.
“This government is determined to create the conditions and opportunities that usher the ‘left behind’ from the stands and sidelines to the playing field,” Mr Burt said.
“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.”
Planning rules will also be relaxed to allow higher residential and mixed-use buildings in the Hamilton economic empowerment zone to maximise space and boost the economy.
Restrictions on condominium ownership will be eased further to boost demand, generate wealth and give extra work to the construction industry.
He noted that the new construction projects now underway, all started in the first nine months of 2017. The total value increased from $87 million last year, representing an increase of 517.8 percent.
“This was mainly attributed to the airport redevelopment and St Regis projects, which combined are worth over $500 million,” said Mr Burt.
“However, the estimated value of construction work put in place fell from $77.3 million in 2016 to $71.9 million over the first three quarters, a decline of 7 percent.
“The majority of the decrease can be attributed to a reduction in the levels of work performed on residential properties, industrial plant and other building projects.”
Payroll tax for the island’s lowest earners will be cut, and employee-rate bands will be adjusted for people earning less than $96,000 a year.
The lowest employee band will be reduced by 0.75 percentage points to 4 percent.
Plans by the former One Bermuda Alliance administration to implement the second phase of a payroll-tax increase have been scrapped by the new Government, so tax rates for employers will remain unchanged.
The payroll-tax bands change would mean a couple earning $48,000 a year each, will get a $720 annual increase in their take-home pay.
A worker who earns $48,000 a year will be $360 a year better off, those on $36,000 a year will be $270 better off, while those on an income of $60,000 will also take home an extra $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.
“This reduction in taxes will reduce the Government’s payroll-tax yield by approximately $5.1 million.”
But the loophole that allows business owner-managers who earn their income in whole or in part through a share of profits to declare “national salaries” – less than they earn – for tax purposes will be closed.
And “the notional salaries will be replaced with a requirement to declare all income received on a cash basis”.
“This change will improve transparency, assist enforcement and largely eliminate the risk of under-declaration and underpayment.
“It is estimated that this change will increase payroll-tax revenues by at least $10 million.”
The proposed professional services tax on accounting and law firms has also been scrapped.
Overall, total expenditure for the year will be $1.18 billion, an increase of $2.5 million on the OBA’s budgeted spend for 2017-2018.
“This was achieved despite the Government’s pay awards to public officers, which cost the Government approximately $9 million,”he added.
Capital expenditure on bricks and mortar will be decreased by $5.2 million to $62.2 million for the year.
Revenues in 2018-2019 are estimated at $1.09 billion – $47.5 million or 4.6 percent higher than the original estimate for the last financial year.
“This level of spending is 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 will go up on tobacco “to reduce the inconsistency between duty rates on cigarettes and tobacco”. And “the duty on wines will be raised by 30 cents per litre in April 2018 to achieve additional customs revenue.”
The PLP administration has also scrapped plans to tax commercial rents, but land taxes on commercial properties will go up by 5 percent as a temporary measure, to bring in an extra $15 million a year.
Economic empowerment zones will be exempted. But the new Tax Reform Committee will continue to examine commercial rents.
The new sugar tax on some products – to be finalised after next month – will go ahead.
But a reduction in tax or the elimination of tax altogether is in the pipeline for “healthy food items”.
The 5 percent duty on eggs and several vegetables, including potatoes, carrots and cauliflower, and fruit, including apples and oranges will be dropped to 0 percent.
“To reduce the cost of living, the Government will lower the duty rate on textiles, which include linen and blankets and shoes.”
Sports clubs with youth programmes will also be given duty relief, which will include full relief on uniforms and equipment.
“This budget, as should be every budget, is about the people,” said Mr Burt.
“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.
“Traditional businesses will be respected but must compete for their market share and come to terms with the voices of others at the table who will in turn, drive this economy.”