How we could stimulate our economy

FRIDAY, OCTOBER 21: With public and private debt rising and revenue decreasing, we are running out of options to look after our people and meet our financial commitments unless we find ways to stimulate the economy.

Recognizing the financial constraint on Government and the financial state of the country, the following recommendations can be implemented with the legislative and policy support of the Government without any financial outlay.

The following recommendations are not intended to be the ultimate answers on how to stimulate the economy and surely they will not all be popular, but they can go a long way to restore the growth of our economy which would increase GDP, reduce our necessity for borrowing and provide jobs, rent and dividends in the private sector.

 Airport

• Increase air traffic flow through our airport to retain US Pre-Customs clearance;

• We have to implement an “ease of entry” procedure for business and high net worth individuals as well as tourists to minimize time spent waiting to clear immigration;

• Improve the private jet facilities and procedures.

City of Hamilton

• Development of the Waterfront to include: Convention/entertainment centre, casino, restaurants;

• Allow high-end retail shops managed, financed and owned by non-Bermudians;

• Extend the city limits to allow for the development of high rise condos by International Business for “key” employees. This would be the only area this would occur which would help keep congestion out of the rest of the island.

Economic Zones

Look at making the following economic zones

• Dockyard (including Ireland Island);

• Southside.

Environment

Give tax incentives to people who import and utilize environmentally friendly products/services.

Financial services

Initiate legislative reform to encourage trust companies, non-retail banking and fund management to establish here.

High net worth individuals

• Provide permanent residency and/or domicile status;

• Allow private possessions and assets to be imported without duty;

• Reduce property purchase tax to half its current assessment;

• Allow for approval in principle to bring “key” employees, both professional and domestic, with them.

Infrastructure projects

• Infrastructure projects such as Waterfront, Airport and any other revenue generating project could be allowed to be privatized (majority ownership by non-Bermudians) which must be listed on the Bermuda Stock Exchange (BSX) or should be private/public structures.

• Projects that are without revenue should be developed in a private/public partnership in concert with a revenue generating project – e.g. the causeway in conjunction with the Airport

International business

Make it easier, more efficient and welcoming to do business in Bermuda. Bermuda has to realize the competitive environment is different and cannot do business on its own terms — we have to adjust to our customer’s needs and wants.

Remove the 60/40 rule

Any public utilities or broad service organizations that impact on the general Bermuda public which are exempt from 60/40 should be listed on the BSX.

Property ownership

• Relax ownership restrictions on married couples where only one is the Bermudian. Purchase of the first property would not require government approval;

• Lift ownership restrictions on PRC holders to allow for the purchase of one property;

• Liberalise immigration policy to allow for Bermudians to sell to non-Bermudians where property is above a set ARV;

• Change condo ownership policy to allow for Bermudians to sell to non-Bermudians where property is above a set ARV.

• Restrict land ownership of companies after 60/40 removal to:

• Major Infrastructural Projects: 100 per cent foreign ownership of the facility with long term leasehold on the land. Company must be listed on the BSX;

• Major service/utility companies: Foreign ownership of real estate for the purpose of operation and management of the business. Company must be listed on the BSX;

• Commercial/Retail Business: Foreign management with Bermudian’s retaining real estate.

Status/residency

• Grant Bermudian status to a limited number who:

• have lived in Bermuda for a minimum of 10 years and;

• demonstrate that their continued presence would enhance the employment opportunities and skills of Bermudians.

• Open residency rights to a wider qualifying group.

Tourism

• Reintroduce local entertainment back into the hotels;

• We also need to market Bermuda as: a diving destination, a fishing destination, a historical destination;

• A tax holiday should be given to any investors/developers who have approval for a project to begin in the next two years or a project with existing approval and a determined completion date;

• To encourage the development of new properties, a pre-established incentive package should be drawn up so that developers know exactly what they are getting and avoid frustration during the negotiation phase. Some of the incentives could include:

• Free payroll tax;

• Import duty relief;

• Free licensing fees.

• Establish a fund for the purpose of promoting tourist establishments that wish to participate. The fund would be supplied by equal contributions from the Hotel Occupancy Tax, the Tourism budget and matched in total by the individual establishment. Government would have oversight over the expenditure of the fund.

Taxes

• Decrease taxes on sale of fractional units;

• End senior benefits such as free land tax above a set ARV;

• End senior benefits of free car licence;

• End senior benefits of free car registration above a set vehicle class;

• Payroll taxes should be reduced to zero for at least three years for employers paying full-time Bermudian employees and self-employed individuals (for example, taxi drivers) receiving less than $50,000 per annum;

• Offer a two-year payroll tax holiday for:

• new international or local business which hires Bermudian employees;

• new Bermudian employees hired by existing businesses.

• Remove tax on boats and increase mooring fees to enable Bermuda to become an international boating centre.

Telecommunications

Bermuda should free up the telecommunications market to maximize new opportunities in technology and minimize cost as a result of competition.

Work permits

• Allow companies during the incorporation process to apply to immigration for approval in principle of “key” employees and both processes should be executed in a prescribed time period;

• If someone is “key” and is moving to Bermuda consider granting their corporate and/or domestic employee a permit in concert with the “key” employee;

• Remove term limits on work permits.

Are you prepared to change and support?

The traditional mindset of doing and seeing things is no longer applicable or working in today’s environment. There are some quantum leaps in policy changes, business changes and overall attitude changes that must happen if we are to survive.

Are you prepared to embrace change that will continue to offer you the comfort and standards that you have enjoyed? We can either help to make a change or when Bermuda fails; we will have no one to blame but ourselves.

All of us have a vested interest in Bermuda and we all need to participate in this discussion to help enact change and make the future more positive.

This is a collective effort and we need your support, comments and ideas. For further information or to express your comments email us at [email protected] or visit us on Facebook: Regeneration of Bermuda’s Economy.

Many thanks to the several members of the local and international Bermuda business community who made submissions in response to the question, “What can the Private Sector do to kick start the economy with Government only being called upon to change policy and legislation and not make any expenditure?”

The majority of their views in response to the question are expressed in this document. Special thanks to Larry Burchall who provided the financial statistics included here.In organizing this report, we have used figures provided by Ministry of Finance, Auditor General’s reports and Department of Statistics.