Burt opens his Budget innings with a straight bat
David Burt, the Minister of Finance and Premier, has a tough job. Nothing is easier than a critic who carries no responsibility to snipe from the sidelines and say what a rotten job he is doing. I have no intention to do that, and right from the start I would like to say that Mr Burt did a highly commendable job in presenting his first Budget.
Why do I say that?
First, there are no new significant taxes, except on mobile phones, and on perennial sins such as alcohol and tobacco. No big deal. Cuts will be made to taxes on eggs and cauliflowers — I never knew such taxes existed — and any cut in taxation is to be welcomed. Let’s hope he moves on to bigger things next time.
The major tax reduction is that of payroll tax: income tax in a Hallowe’en dress. This is reduced for low-paid employees: a good thing. There is no mention that it will be increased for those in higher paid jobs and that too is a good thing. Taxation is like a slow-working poison to an economy and few people understand that the past success of the Bermuda economy arose from low taxes.
There are plans to open up the legal profession and banking. Openness stimulates an economy much more than government expenditure. This too is a good thing and is even more surprising coming from a Progressive Labour Party government whose past views were strongly anti-foreigner. Nothing like tough times to open eyes.
One minor criticism on the subject of taxes. The more exemptions and special treatments there are, the more difficult it is for taxes to be administered impartially, and the greater is the temptation for others to lobby for benefits. Sounds like an opportunity for highly taxed lawyers.
The other major benefit arising from the Budget is to change the 60:40 ownership rule of companies. This has inhibited development of major corporations and is a throwback to the mercantilism of the 18th and 19th centuries.
Capital should be allowed to move to where it will most gainfully be employed and not for the protection of organisations that fail to bring themselves up to date. I would have favoured the complete abolition of the restrictions on foreign corporations, but half a loaf is better than none.
The biggest disappointment for me is the failure to restrain government expenditure to take decisive steps to reduce our huge debts. If Bermuda has an Achilles’ heel, then foreign debt is the leading candidate. Older Bermudians have placed an unfair burden on the young by running up massive debts and Mr Burt would have gained even more credibility had he made even a token attempt to pay down the millstone around our necks.
Another disappointment, in my eyes, is the failure to get rid of government departments whose purpose is lost in the mists of time and for whom there is no rational reason to exist. One of many of such departments would be the Rent Commissioner, whose achievements are probably nil, and whose necessity in a period of surplus housing is impossible to argue.
These two disappointments are minor criticisms.
Mr Burt has opened the batting with a good Budget. He should be commended for not increasing taxes significantly, and for opening up the Bermuda economy to more competition. I hope his straight bat continues.
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