Who's best equipped to solve Bermuda's problems?

FRIDAY, MARCH 30: What do you think should the big issues in the next election?

Crime? Corruption? Falling incomes? Rising unemployment? Fast-increasing health costs?

A public school system that has inspired a significant portion of the population to pour their income into private school education?

An aging population? High housing costs?

All these are important topics for debate.

How much credit or blame should the current government be given?

That’s one obvious question for voters to consider.

Another is: Who has the most convincing plans, and the most impressive team, to fix these problems?

But let’s take take a look at a third question, that voters would be wise to ask of themselves and those aspiring to lead them:

How big a role do we expect Government to play in tackling this long list of issues?

Which leads, inevitably, to a fourth question: If we do want government to be a big player in fixing all this, how in tarnation are we going to pay for it?

Bermudians (or at least our leaders) have long taken pride in the notion that Bermuda is a successful, caring little country that doesn’t require such crutches as public assistance.

Bermuda has had pretty low taxes all around, relatively low government costs, and one of the highest per capita incomes in the world.

It’s quite remarkable, when you think about it. We only introduced a mandatory pension system a few years ago and it is, quite naturally, underfunded. We don’t have unemployment insurance, which an increasing numbers of unemployed Bermudians surely wish we had. We don’t have a very extensive welfare system, though it’s growing.

We still don’t have a traditional income tax — only a payroll tax that doesn’t capture investment income, capital gains or corporate profits, and caps the amount of income it applies to.

Think for a moment of taxpayers in the United States, where the top tier of federal income tax is 35% (and there are state income taxes and an assortment of payroll taxes too). Top-earning Canadians pay 29% to their federal government and 11.5% to their province.

Top tier income tax in the UK is 50%, while in Japan it is 50%, China 45%, Belgium 54%, France 50%, and Jamaica 35%.

In many countries, including most of Europe, even average workers pay more than 40% of their income in income tax.

Tax increases

Can Bermuda still afford to pay significantly lower taxes than most of the world?

I find it hard to see how we can avoid significant increases in our tax rate in the years ahead.

Our population is aging fast. Fewer people are working and paying the taxes that Government needs to provide help and services. More and more people depend on pensions and charity to survive. More and more people require expensive medical care. More and more kinds of expensive medical treatments and procedures are being developed.

Today’s careers require more and more expensive education, cruise ships require bigger and more expensive ports, while cars and trucks require bigger and more expensive roads than they used to.

It is true that the Government’s squandering of taxpayer money over the last few years has been reprehensible.

But we shouldn’t be lulled into thinking our country’s finances will sort themselves out if only we can end waste and mismanagement.

The simple truth is that it costs a lot more to run a government than it used to, and it’s going to cost a lot more in the future. There are a steady flow of increasing bills coming up, and they aren’t going away.

Bermuda can’t borrow much more than it is borrowing already.

So taxpayers are going to have to pay for it, unless they are prepared to be cold and uncaring to the ill, the elderly and to students. And it’s going to cost a lot.