Land tax rates to be revised

Government is to revise land tax rates in order to avoid a massive hike in annual rental values in the summer.

Finance Minister Paula Cox said the new valuation list will come into effect on July 1.

She said: “It is well known real estate and property prices have risen appreciably in recent years.

“The preliminary indications are that the increases in Annual Rental Values are in the range of 25 to 30 percent.

“Government does not propose to increase the revenue yield from land take in 2004/5 by 25 to 30 percent.”

She said the limited effect of the new valuation list would see some small increases and even some reductions. - Matthew Taylor

Consultant to be hired for initiative

Government is to hire a consultant for the final roll-out of its zero-based budgeting initiative.

The system requires departments to start from scratch and budget for what they really need rather than simply continue the pattern from last year.

The Fiscal Planning and Control section has been given a nine percent increase to cover the cost of the consultant.

Zero-based budgeting was used in 30 departments for this Budget which is 70 percent of the total. Finance Minister Paula Cox said Government aimed to have all departments operating on that principle by next year. - Matthew Taylor

SBDC's role questioned by Gibbons

Opposition Leader Grant Gibbons has questioned the role of the Small Business Development Corporation (SBDC) and said new ways of funding small businesses needed to be found.

He said: “There's a great deal of frustration with the SBDC and the services it provides. It gives loans and gives training.

“It's important to make sure we are addressing the needs of those clients.

“There are some people I have talked to who are saying some banks are actually providing more services of these types and more useful feedback than the SBDC.”

He said small businesses needed equity even more than they did loans. - Matthew Taylor

Gibbons criticises payroll tax hike

New hikes in payroll tax for employers and a raising of the cap on employees from salaries of $225,000 to $235,000 was approved by MPs last Wednesday.

The United Bermuda Party warned this was a tax on employers which would put them under pressure not to take on staff, and warned international businesses may shift some jobs overseas.

The cap on “assumed earnings” on which payroll tax is payable goes from $225,000 to $235,000.

And payroll tax overall goes up from 12.75 percent to 13.5 percent, with employers picking up the tab for the increase.

Small companies will be exempt from the changes, as will those in vulnerable industries linked to tourism such hotels and restaurants.

Finance Minister Paula Cox told MPs the changes were “prudent” and still kept Bermuda a competitive jurisdiction while netting Government an extra $12 million.

But Opposition leader Grant Gibbons said because companies currently pay eight percent of the 12.75 percent payroll tax, the three quarter percent rise really amounted to a nine percent increase paid by employers.

And coupled with a 4.5 percent increase in social insurance for employers, this meant a 13.25 percent hike in costs for businesses.

“This (payroll tax increase) is a tax on hiring people.

“It is a direct incentive for businesses to hire less people,” said Dr. Gibbons. Local companies looking to expand had to hire more people in Bermuda, but international businesses could employ - or outsource - jobs to other jurisdictions.

“When you increase the cost of labour, you provide an incentive to look to other places to hire labour,” said Dr. Gibbons.

The jobs most at risk would be lower level jobs in international business which Bermudians had traditionally used as an entry point to get into that sector, he added.

Ms Cox described the payroll changes as “fair, modest and prudent” and said they were not at a level that would cause problems to businesses. - Stephen Breen