Every Bermuda Government budget is consequential to our fate, but none is as potentially critical as the 2018-19 Budget Statement soon to be presented by the Minister of Finance. Why? Because Bermuda finds itself at a critical fiscal crossroads. And the steps we choose to take this year could have monumental repercussions for the island. The Government’s Pre-Budget Report does a good job of clearly outlining the issues. Let’s start with a brief overview.

For seven of the past nine years, Bermuda’s economy has contracted. The debt that Bermuda owes to its creditors stands at about $2.5 billion. An additional $1.3 billion is owed in unfunded medical and pension obligations for government and Civil Service employees. These figures will rise again in 2018-19, as Bermuda continues to pay more in expenses than it earns in revenues.

Add into the mix United States tax reform, the risk of Bermuda being put on the European Union blacklist, and any potential adverse consequences of the 2018 Caribbean Financial Action Task Force review, and 2018 looks to be a year unlike any we have ever experienced.

The good news? This ship can be turned around, but only with all hands on deck. This requires everyone hearing and understanding the issues and priorities. No one wants to pay more taxes and no business wants more competition. But if we continue to think “me” before “us”, we will not bring about the progress that we need. The key priorities are as follows:

1, Diversifying the economy to create more jobs

This is a stated goal of the Government. We all know that Bermuda’s economy is heavily dependent on our reinsurance and tourism sectors. The challenge for Bermuda is to find other areas where businesses can find value in operating in Bermuda.

How can we achieve this? For starters, we have to acknowledge that change may be required that we may initially find unsettling. Certain policies that may have served Bermuda well in the past must be revisited.

The Premier recently announced a desire to look into relaxing the 60:40 ownership rule, whereby businesses operating in Bermuda must be owned at least 60 per cent by Bermudians — unless special permission is granted by the Government.

We need to have a discussion about the pros and cons of amending this rule because there are clearly risks and opportunities.

However, foreign investment into Bermuda must be encouraged, which it would be if we relaxed the existing foreign-ownership rules in a measured and thoughtful way.

2, Broadening the tax base in a fair and equitable way

The bulk of Bermuda’s revenues has come historically from payroll taxes and import duties. The Government’s goal of spreading the tax burden across other areas in the economy makes a lot of sense. The challenge is how we do this. Proper analysis is critical to getting this right.

For example, the pre-Budget report lists taxing commercial rents and adopting a general services tax on certain professions and consultancy services as two potential areas to broaden Bermuda’s tax base. Commercial property has sustained substantial land-tax increases in the past two years, and is the most depressed sector in the real estate market. So, effectively, it can be argued that this sector is already contributing in a fair and equitable way. Additionally, while adopting a GST for certain labour in Bermuda sounds like a good idea in theory, if jobs move to other lower-cost jurisdictions, Bermuda may find itself collecting fewer rather than more revenues from this sector.

Finally, while on the topic of taxes, Bermuda must do a better job of collecting what is owed. Approximately $230 million is owed to the Office of the Tax Commissioner, mostly relating to payroll taxes deducted from employees’ pay but not forwarded to the Tax Commissioner.

3, Growing the workforce

Bermuda’s ageing population is a serious problem that needs to be highlighted across our community. Bermudians who have worked long and hard their whole lives expect to and deserve to receive medical and retirement-income benefits.

The reality, though, is stark. If the size of our working population does not increase, Bermuda’s debt situation will worsen and our retirees may not be able to count on financial support through their golden years.

In the Department of Statistics 2014 report, Bermuda Population Projections 2010-20, we read: “According to the United Nations, if fewer than 4 per cent of a country’s population is 65 and over, it is ‘young’; 4 per cent to 7 per cent of elderly persons represent a ‘mature’ population; and more than 7 per cent is an ‘aged’ population. In 2020, it is expected that Bermuda’s elderly population will represent 20 per cent of the total population.”

Immigration reform is an emotive issue in Bermuda, but it’s a topic we will need to discuss. It is almost impossible to envisage growing our tax base measurably without more people living and working in Bermuda. How we get there is up for debate; that we desperately need more people in the workforce is not.

So Bermuda finds itself at a critical point. Fiscal discipline and clear-sightedness will need to be the order of the day, and 2018 will be a watershed year. But Bermudians have a track record of rising to a challenge. If we work together, a way can be paved for a better future for all.

• John Wight is president of the Bermuda Chamber of Commerce