BPSU: taxes need to be reviewed

“Alarming” is how the Bermuda Public Services Union describes the island’s growing Budget deficit.

On Wednesday afternoon the BPSU released its analysis of the OBA’s 2013-14 Budget.

A BPSU spokesperson said the union expects to have “an open and frank dialogue” with Government with regard to wages and compensation but also questions why the OBA are spending over $100 million on consultants and professional services.

The spokesperson said while Government is relying on foreign investment to get our economy kick-started “it can be questioned if the Budget does enough to help them achieve the economic turn-around that is needed.  The assumption that a reduction in licensing fees for non-Bermudians and permanent residents who purchase property will translate into significant economic activity is questionable. 

“The probable spin-off effect on employment as a result of this change will only be meaningful if this is done in tandem with the types of construction activity that translates into real economic growth such as the Hamilton waterfront redevelopment project which will require high volumes of labour input.”

The BPSU said it was “commendable” that there is a two-year tax holiday for new Bermudian hires saying it “will certainly give Bermudians an advantage when it comes to employment. In addition, the move will also assist businesses as it reduces their operational costs.   

“This move should open up employment options for Bermudians, however, it is difficult to agree with the notion that this incentive is revenue neutral as no other tax can compensate for or equate to monies lost from payroll tax revenue for average Bermudians.”

The BPSU said it is anticipating contract negotiations with Government and wants to do its part to “improve the financial position of Government.  We are not alarmed with the idea of shared sacrifice as public services workers have been playing their part and assisting the Government and the country from the beginning of the recession. 

“Five years of consecutive budget cuts have significantly reduced the amount of overtime received, significantly reduced the number of temporary workers, significantly increased the number of vacant posts, and reduced the operating budgets of most departments. Most notably, BPSU members have received less than a 3 per cent increase in cost of living adjustments over the last five years while inflation has increased above 10 per cent over the same period of time. 

“What is of concern to the BPSU in reference to Government expenditure is the estimated hundred million dollars paid out by our Government for consultants and professional services annually. These figures need to be reviewed and addressed.”

The spokesperson added: “Bermuda is in the midst of its worst recession and an overhaul of our current tax structure is needed as the gap between revenue and expenditure is becoming increasingly wider. The estimated $331.6 million budget deficit is alarming, and shows that the Government has a limited strategy to improve the country’s financial position.

“While the Government may want us to believe that this Budget will take us in a new direction, in actual fact, it takes us further into the hole we are trying to get ourselves out of.  

“If the Government is serious about improving its financial position it will have to do a critical and comprehensive review of the structure of the current tax system, the structure of the civil service and the liability of the Government workers’ pension plans.”