FRIDAY, FEB 26: Islanders will fork out more money in vehicle, land and payroll taxes this year.
But retailers, taxi drivers, fishermen and hoteliers will get some relief.
Finance Minister Paula Cox this morning unveiled her $1.2 billion Budget for 2010/11.
New initiatives include allowing international companies to buy homes for their staff; permitting needy islanders to draw from their pensions; full-time monitoring of CCTV and a communal drug rehab scheme for prisons.
There are no so-called 'sin taxes' - on liquor or tobacco - and bus and ferry fares will not go up.
But the stinger is a hike in payroll tax from 14% to 16%; it will pour $427m into government coffers but business figures are aghast at the prospect of paying more (see separate story). Also, an array of government services to the public will rise by three per cent.
Ms Cox described the financial turmoil of the past two years as "a one in a 100-year event", the consequences of which "may be with us for many years to come".
She added that the economic outlook for Bermuda "is more positive than it was at this time last year" and anticipated a return to positive growth in 2010, in the one per cent range.
But there was a strong undercurrent of caution in her message: "We face sluggish GDP growth, employment gains that are too slow to prevent further increases in unemployment and firms still very reluctant to hire vigorously. There is no quick fix..."
Ms Cox said Government's economic plan would focus on four elements: Helping Bermudians keep and find jobs making the necessary investments for growth; creating safe neighbourhoods and providing for more affordable health care options.
The Budget is $100 million larger than last year's estimate but roughly equal to what Government actually spent in 2009/10. Government will have to borrow $143 million to meet its needs (last year Government borrowed $147m) and will raise the debt ceiling from $1 billion to $1.25 billion.
The Sinking Fund - in which money is set aside to pay off public debt - will be topped up by $18m this year, adding to the $10m put in last year to create a balance of $82m.
Ms Cox said: "We stand on the cusp of a new beginning. [This Budget] will build upon the existing measures that have been implemented to assist families and businesses through one of the longest and deepest recessions that we have experienced in our lifetime."
The minister said ideally, jobs would be created through infrastructure projects.
"These would be stimulus programmes. Government spending on infrastructure - bridges, hospitals, modern airports, sewage plants and ports - has a higher multiplier effect for adding jobs to the economy and we would fulfill a national need."
Capital expenditure will total $144 million with most of the money going on construction projects that are already underway. A total of $34 million is allocated the new police and court building on Court Street while the Bermuda Hospitals Board will get $10 million for the redevelopment of King Edward VII Memorial Hospital and $3m for the refurbishment of Lefroy House. Also, the airport will get a new radar system.
Payroll tax will increase from 14 to 16 per cent with both the employer and employee paying one per cent more.
Motor vehicle taxes will increase by five per cent and an increase in land tax will generate an additional $50 million for Government coffers. (Land tax rates were not changed except at the top ARV levels, rising from 18.23 per cent to 19.20 per cent).
Foreign currency purchase tax and stamp duty will rise, but no figures were given.
As mentioned in the Throne Speech in November, discarding waste at the airport and Marsh Folly dumps will attract a fee, starting some time this year.
The pensions act will be amended to allow islanders facing financial hardship to dip into their pensions.
Housing initiatives include a Rent-Geared-to-Income plan to help 36 families with the completion of the Perimeter Lane Development. Harbour View Village is expected to add 58 lower priced homes to the housing stock. As previously announced, the Bermuda Housing Corporation will provide interested-free loans to some first-time home-buyers.
The education budget is $143 million with emphasis on implementing the Cambridge Curriculum in public schools.
The Ministry of Labour, Home Affairs and Housing gets a $6 million increase to $143M. The Bermuda Police Service portion of this is $65.7 million and will include full-time monitoring for CCTV cameras and professionally accredited training for investigations of serious crimes.
A container scanner to intercept guns and drugs at Hamilton Docks will cost HM Customs $2.6m, partially offset by the Confiscated Assets Fund.
A national task force will be established to tackle anti-social behaviour but details were not provided in today's speech.
The Department of Corrections will set up a new drug treatment programme, a "24-jour living environment in which offenders with similar problems learn to work and live together". No specific cost was given.
The Mirrors social rehab programme will enter its fourth year, with $2.5m of funding.
In other areas, Government promises the work permit process will be faster with new computer programmes set up. The new programmes will also help with the approval process for work permits, land licences and passports.
The Health budget is $181 million. Starting in April, FutureCare will be available for seniors who are 70 or older and for those who turn 65 in 2010. Those aged between 65 and 70will have to rely on HIP or private health care programmes.
Bermuda College will start a nursing programme where students will carry out their clinical observations overseas.
The Ministry of Justice will be provided $19 million with a special emphasis on a Witness Care Unit to help combat violent and serious crime.
This is to aid and support witnesses in an effort to "reduce feelings of intimidation" and to encourage more people to testify.
The Tourism and Transport Budget will get $121 million and a Tourism Mega Fund will be set up "to complement the tourism marketing budget... a private/public sector vehicle to be used for collaborative programmes".
With the arrival of low cost carrier WestJet from Toronto in May, a marketing plan will be introduced to lure more Canadians here.
And the Department of Civil Aviation is considering opening a satellite office in Europe to take advantage of the rising number of European aircraft on the Bermuda Register.
The retail sector will continue to get relief January through March with payroll tax a reduced level. Customs duty on some electronic items, such as TVs, will be reduced.
Taxi operators will be exempt from payroll tax for an unspecified time period, date back to January. The relief will be in the form of a rebate for taxi owners, drivers and dispatchers.
Fisherman will get a break on both gas and diesel fuel until March 2012. Previously they only got a tax break on diesel.
Minister Cox said Government had "sought to maintain the balance between spending restraint and tax increases and has ring-fenced education, public safety, social rehabilitation and health" while safeguarding tourism and international business.
She concluded that "there is a brave new world out there and we have competitors" and that meeting the challenges ahead "will require hard work, sacrifice, fortitude, courage and belief in the goodness of the human spirit."
Hey John,
Taxes NEVER go back down - even under the UBP it never happened! And they were fiscally responsible.
IF Bermuda was run as a business, the Chief Financial officer would have final say over spending. However, as it seems to be run as a bottomless coffer, this won't happen
Posted: Monday, March 01, 2010
Comment by:
Justin
Mr. Din - instead of blatantly agreeing with every PLP statement (as evidenced by your numerous posts on this website) with a broad statement as to how you approve, why don't you elaborate as to why this is such a balanced budget and why you you believe the PLP are so infalliable. If you understood basic economics you would know that the this PLP administration has got it wrong (hence the raising of taxes during a recession). But I guess the blind only see what they want to see. Just like the Turks and Caicos, Bermuda and her people are shown to be seriously politically immature. GROW UP BDA!!
Posted: Sunday, February 28, 2010
Comment by:
marc
business as usual for the PLP Spend on like you do we need a finance Minister with a back bone!!!
Posted: Saturday, February 27, 2010
Comment by:
Khomeini Taalib-Din
With what this article says I'm satisfied with it. It doesn't seem all that bad, clearly
it has balance.
Posted: Friday, February 26, 2010
Comment by:
John Doe
Will we see a decrease back to 14 percent when the economy picks up, or will it be continued to be used for Ewart’s first class flights for government sponsored vacations.
