The Government plans to gather more information on personal and business income to support any future decision on whether to introduce income tax.

The move, announced by David Burt, the Premier and Minister of Finance, in his Budget Statement, follows a recommendation made last year in the Tax Reform Commission’s report.

Mr Burt noted that the TRC report “recommends that Bermuda should examine, in a careful and measured way, the merits of a low-rate, broad-based income tax system, designed to maintain Bermuda’s competitiveness while making our tax system more progressive and more transparent”.

He added: “To support that work, the Ministry of Finance will advance the commission’s recommendations for enhanced data collection on personal and business income so that any future decisions are informed by evidence.”

A personal income tax could be applied to rental and investment income, which go untaxed under Bermuda’s existing tax regime.

The TRC also suggested consideration of a corporate tax applied to businesses not in scope of the corporate income tax.

“These provisions could augment and/or replace various aspects of Bermuda’s existing tax system,” the TRC report stated.

Among the potential advantages cited by the TRC would be the spreading of the tax burden across a broader spectrum of economic activities in Bermuda.

The resulting shift away from the outsize weight borne by employment taxes under today’s regime could also help to make the tax system more progressive and make Bermuda more competitive.

An argument against income tax in Bermuda is that the complexity and cost of establishing a personal and corporate income tax regime — and the bureaucracy necessary to support it — would outweigh the benefits, given the island’s small population.

More information is necessary to assess the cost versus the benefits of income tax, the TRC argued, hence the need for more data on personal and business income.