A body representing Bermuda’s business community says the island needs to focus on growing its tax base of businesses and individuals, rather than increasing the tax burden on those already here.
A similar message has come from Sean Whiting, owner of Prime Consultants Ltd, an electronics consultation and device repair business, who said that tax increases on small businesses would likely lead to job losses, given the strained economic environment.
Mr Whiting ignited a lengthy chain of commentary on the consumer-focused Facebook page Maj’s List, when he questioned whether the island was in recession because of apparent falling levels of business activity and invited other businesspeople to comment. With Curtis Dickinson set to deliver his maiden Budget Statement tomorrow, John Wight, president of the Bermuda Chamber of Commerce, conceded that the Minister of Finance was “not in an enviable position”.
He also gave Mr Dickinson credit for his transparency and willingness to discuss issues with the business community and the wider public ahead of Budget day.
Mr Wight quoted from last November’s report from the Fiscal Responsibility Panel, a trio of experts advising Government on fiscal issues, saying the ageing population trend is “perhaps the single most serious long-term issue … and one that now needs to be addressed with some urgency”. The panel stated that “on present trends, Bermuda is heading for a downward spiral of demographic and economic decline”.
Mr Wight said: “It should now be well understood that the impact of the 6,000 or so people who left Bermuda in the years following the 2007-2008 global recession had a profound and lasting effect on government finances, as well as on small, medium, and large businesses operating in Bermuda.
“Bermuda’s economy needs more businesses and more individuals paying into the Government’s fund, not more taxes to be incurred by the existing businesses and individuals.”
Mr Wight added: “The 2018-19 government Budget was about stimulating economic activity in Bermuda to meet the Government’s financial goals. It was largely met with support from the business community.
“It remains to be seen whether the 2019-20 Budget will elicit the same reaction tomorrow.”
Mr Wight said he appreciated the challenges that come with Mr Dickinson’s role.
“He faces significant external pressures such as the potential blacklisting of Bermuda by the EU as a ‘non co-operative’ tax jurisdiction, as well as internal pressures to move closer to a balanced budget without stalling the economy through new and/or higher taxes — and this at a time when individuals and businesses can least afford to pay more,” Mr Wight said.
Mr Whiting caused a wide-ranging social-media conversation with this post: “Time to address the elephant in the room! We are a new and growing business (and my experiences should be taken with that in mind), however I have been watching stores and businesses to understand what ‘potential business’ may be and what I am seeing should worry this country.
“Whether it’s 12 noon or 3pm, what I am observing on a regular occurrence are dead businesses and staff with nothing to do. Fellow business owners what are your thoughts? Is this country in recession?”
Mr Whiting told The Royal Gazette that this was a conversation that needed to be had and said businesspeople were not openly discussing the situation for fear of worrying their employees and customers.
The latest economic data showed that Bermuda’s economy grew, measured by gross domestic product, in the second and third quarters of last year. However, local businesses are taking less at the till, with retail sales volume having fallen for an eighth consecutive month last October.
Asked what he would like to see in tomorrow’s Budget Statement, Mr Whiting said: “Tax relief for small businesses — certainly if taxation on small businesses is increased, it will lead to more unemployment and more businesses raising their costs.”
The responses to Mr Whiting’s post included comments on the impact of internet shopping and the need for more people on the island.
Mr Whiting said an improvement in technical training could help to stem the tide of money leaving the island. In his own sector, he said he saw a lot of money going overseas for phone parts and repairs. If there were more people with the necessary training on island, he said, more of that money would be spent in Bermuda and circulate in the economy.
He added: “The cost of living needs to be reduced. By the time the consumer has paid rent, bought groceries and paid taxes, then there is very little disposable income left.
“Small businesses need to see more spending. We can do that by encouraging more people to come here and engage in entrepreneurship. Right now, we’re scaring them off.”
As for the international insurance sector, fiscal prudence from the Government was a theme high on its Budget wish list.
John Huff, chief executive officer of Association Bermuda Insurers and Reinsurers, said: “Abir is encouraged the Government is looking for efficiency and better utilisation of resources within the Government to assist in lowering costs.
“Ideally, the Government will continue to find ways to reduce expenditures to contribute to a reduction in the cost of doing business in Bermuda.”