9 September, 2014

Dear Sir,

The letter from Eron Hill on 2nd September was very interesting and he is to be complimented for putting his concerns regarding the decisions taken by the OBA Government affecting his future as a young Bermudian into words.

However it is obvious that he doesn’t understand how Bermuda’s economy works. Do they not receive information with regard to Bermuda’s fragile economy in school? If not, it is time to include it. Bermuda depends totally on income derived from outside Bermuda. Without it the Bermuda dollar is worth nothing.

To keep this letter short I will only respond to some of the points he makes in his letter:

1. Term Limits — The international companies which provide the largest portion of the income the Government receives had a great problem with term limits. Because there were and still are not enough qualified Bermudians to fulfil the jobs available the companies were forced to recruit from overseas. The problem was that, having recruited some very good individuals, after three years, six years or so they were forced to let these good employees go. Thus the knowledge they had gained and the contacts they had made were lost to the company. The company had then to start all over again advertising overseas for individuals to take their place with the resulting extra expense and time spent locating someone suitable. Thus this became a revolving door.

2. Payroll Tax — The previous government even before the downturn in the world economy was experiencing difficulty in meeting its financial obligations and decided to increase the Payroll Tax by two percent in an effort to increase its income.

As a result of the above increase in tax the international companies virtually voted with their feet. What did they do? They sent some of the work overseas to places such as India, Canada and Scotland. These were not jobs that no longer existed. They were just relocated. And some of the CEO’s also relocated. They returned to the USA, or wherever and jetted back to Bermuda as necessary.

The two decisions made by the previous Bermuda Government with regard to both Term Limits and the increase in Payroll Tax resulted in an exodus from Bermuda and the loss of both expatriate and Bermudian jobs in Bermuda. After the increase in the Payroll Tax (which was intended to increase Government income) the tax actually brought in less money because jobs went elsewhere.

This affected local companies as well. They had to downsize as there weren’t so many “foreigners” around to increase Government’s revenue, rent apartments and houses, pay electricity bills, shop in stores, visit restaurants, buy cars etc. As a result many Bermudians lost their jobs. Have you ever tried to check a problem with your credit or debit card and you end up talking to an individual in India or elsewhere. Another Bermudian Bank job transferred elsewhere.

Erin’s remarks with regard to the “loophole” in that current legislation which permits Long Term Residents to apply for status. Without a doubt the law with regard to immigration needs to be updated. However the law is the law. It would be pointless for Government to endeavour to change it retroactively. I think the numbers of people who will apply is vastly overestimated as is the number of children since many of them already have status, having been born in Bermuda and lived in Bermuda were able to apply for status when then reached 18 years of age. If denied these individuals who had applied for status would seek a Court ruling and the case or cases would probably go as far as the Appeals Court and the Privy Council involving the Government in great expense and spending money which it does not have and all to no avail.

Erin, what you need to take on Board is that these expatriates do not take away jobs from Bermudians. These “expats” and the international companies enable Bermudians to have jobs with them or elsewhere in the economy (law firms, accounting firms, IT firms, etc). Hopefully as young Bermudians get better educated they will be able to climb the ladder. But we always have to keep in mind that we are in a global world and if Bermuda doesn’t make the right decisions our competition in other offshore places will take advantage and our economy will suffer.

I personally believe the OBA is endeavouring to get us out of the mess we are in and in order to do so we all need to pull together. Difficult decisions need to be made and some of them will be unpopular but they have to be taken if we are to succeed. And in this connection I wish you well Erin and I hope you will keep an open mind and be aware that some seemingly well meant decisions often have unforeseen and unfortunate consequences.

Anne Pearson