Tax breaks for projects of national importance’
Struggling construction firms are to get payroll tax breaks in a bid to boost the sector.
Finance Minister Bob Richards said the payroll tax holiday would apply to major projects “of national importance” like new hotels.
“This certainly won’t hurt — some of the developers were looking to get something like this and it’s something I think will be welcome in certain quarters,” said Mr Richards.
He added that the measure would be introduced after discussions on how to apply the tax breaks and draw up a formula for the Tax Commissioner’s office.
Mr Richards said: “It’s still fairly early days and we have to work out the mechanics of how we’re going to do it.
“We’ve got to do what we can to help the industry, but we have to strike a balance.”
Mr Richards said the scheme would be similar to that set up to encourage new Bermudian hires, with payroll tax breaks for firms that took on staff included in last year’s Budget.
He explained: “We basically forego the employers’ portion of the payroll tax to make the hiring of Bermudians cheaper.
“We’re going to have that approach in the construction industry, but it’s only for projects of national importance — larger projects.”
Mr Richards added that the concessions will help bring foreign investment into the Island.
And he said the Economic Development Committee (EDC) would decide which projects are eligible for the concession.
Last week Government announced plans to give building firms tax relief, noting that the sector had shed around 1,200 jobs in the last five years.
Mr Richards said the move will help “provide a climate conducive to job creators to bring their capital, expertise and experience to get our economy moving again”.
“The recent announcement that planning applications in the first six months of the year have markedly increased between 2013 and 2014 should result in an uptick in construction work,” Mr Richards said.
“The construction industry makes a vital contribution to the competitiveness and prosperity of the economy and is an important gateway to the attraction of much needed foreign investment.
“The EDC is dedicated to ensuring large scale projects, especially those focused on new hotel developments, are given top priority and approvals at the highest levels of Government.
“Direct foreign investment is going to be one of the critical ways in which we dig ourselves out of this economic stagnation that has seen job losses and business closures during the last five years.
“We must attract foreign capital to our shores that will provide jobs not just in the construction industry, but all the other sectors that benefit from a growing workforce with more money to spend and invest in our local economy.
“The Bermuda Government can’t finance the projects and create jobs but we can provide a climate conducive to job creators to bring their capital, expertise and experience to get our economy moving again.”
Construction Association of Bermuda president Charles Dunstan, of building firm Kaissa Construction, said: “Anything like this will be positive if it encourages developers to pull the trigger on new projects.”
He added that major works — like the new hospital building, Waterloo House in Hamilton and the remodelling of the Hamilton Princess — were drawing to a close, pointing towards a quiet summer for the industry.
Mr Dunstan said: “Government is doing everything it can, I imagine. Certainly, there is a consensus of opinion that regeneration of the construction industry has got to come from hotel development.
“The Hamilton Princess was a shot in the arm, but it’s likely to be drawing to a close soon.
“Developers are looking for various concessions to make their business models viable — and some of that has to be the construction costs.”