A portion of corporate income tax revenues should be reserved to bolster social insurance reserves, the One Bermuda Alliance said today in its Reply to the Budget.

The 38-page document, titled The Numbers Tell the Real Story, opened with an economic review, followed by a look at Government’s performance and a dedicated section on the CIT and fiscal management. It also provided solutions under a section headed “how to get it done”.

It said: “The OBA focuses on fixing the underlying issues facing Bermuda, not on temporary band-aids for short-term political wins.

“We would target support where it is most needed, protect our revenue base, create growth and opportunities, and build long-term stability instead of chasing short-term political applause.”

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Reply to the Budget

Delivered by Douglas De Couto, the shadow finance minister, the Opposition’s reply said it was important to remember the “poor performance of the Progressive Labour Party” in recent years, and that CIT and the international business sector aside, the island’s economy has remained “flat”.

It said public education must be fixed as parents move children into private schools to avoid disruptions in the public system.

Dr De Couto said that while unemployment was technically achieved in Bermuda, data showed that was because there are fewer jobs to fill.

He noted that the OBA supported the Government’s public service pension reform but that reform of the Contributory Pension Fund, also known as social insurance, “seriously lags behind”.

The shadow minister said according to the 2023 actuarial review, social insurance will run out of funds by 2042 unless the Government invests more.

He told MPs it would run out even before then without “serious reform”.

Dr De Couto added: “Based on the actuarial report, there is approximately a $2 billion unfunded liability that effectively belongs to the Government”.

He said: “The OBA would prioritise using CIT income to pay down Bermuda’s debt, which includes this social insurance liability.

“We would support a one-time payment of CIT funds into social insurance to soften the impact of any changes on Bermudians, such as increasing contributions or raising the retirement age, ensuring Bermudians are protected while the system is stabilised.”

Transfers from the corporate income tax to the consolidated fund for 2025-26 totalled $279 million.

David Burt delivered his 2026-27 Budget Statement on February 20, when he said that the sum was in addition to the $605 million the Government will use in CIT receipts to pay off a government bond due in January 2027.

The Premier and Minister of Finance said that the fiscal plan would help to bring down the high cost of living in Bermuda with a reduction in payroll taxes for all workers, as well as major investments in capital projects and social programmes, including housing, healthcare and education.

The Budget showed that the PLP administration delivered an audited consolidated fund budget surplus of $153.1 million for 2025-26.

Dr De Couto’s reply from the OBA said that Bermuda faces $1.7 billion in debt repayments over the next four years, requiring $432 million per year.

He said the Opposition supports 70 per cent of net CIT revenues being used to pay debt interest, reduce net debt or accumulate net financial assets, as pledged in the Budget.

The shadow minister added: “The Government’s three-year plan already falls short by almost a quarter of a billion dollars.

“Meanwhile, expenses before interest are 24 per cent higher than two years ago and spending on consultants has almost doubled to $99 million.

“In addition to the risks to international business profits that will reduce the CIT income from IB, there are also risks arising from the evolving global minimum tax framework, and from Bermuda companies’ responses to the CIT and Bermuda Government policies.”

These, he said, included the fact that the Organisation for Economic Co-operation and Development rules were under review and “evolving interpretations”.

Dr De Couto added: “Some companies may even leave Bermuda. Without a tax advantage, our island risks losing its appeal.”

His reply said the challenge will be to make sure that Bermuda remains an attractive jurisdiction in which to do business.

Speaking on government performance, the first item raised in the reply was “failed” education reform, with the Opposition demanding answers on who should be held accountable.

Dr De Couto said that the OBA prioritised the creation of an independent education authority “professionally governed, performance-driven and insulated from political interference”.

He added: “Its mandate would be clear; raise literacy and numeracy, improve attendance, reduce disciplinary disruptions and prepare our students for their future, whether in skilled trades or university.”

Dr De Couto welcomed the Government’s commitment to reinstate counselling services for young people, saying they should never have been removed.

The Budget reported that unemployment in Bermuda had reached just 1.4 per cent, meaning there is technically no unemployment in Bermuda.

However, the shadow minister’s reply said: “That statistic is misleading.

“Unemployment is low because there are fewer people here to fill the jobs.

“When the workforce is shrinking because people are leaving, that is not an economic strength; it is an economic decline.”

Dr De Couto added that under the PLP, the economy “shrank and then flatlined”.

“It gives me no pleasure to say that since the last Budget, very little progress has been made,” he said.

The shadow minister noted that GDP had barely recovered since the Covid pandemic.

“Local GDP has grown only 4.1 per cent since 2017, an average of 0.6 per cent per year,” it reported.

“In contrast, IB has grown 30 per cent over the same period, or 3.8 per cent per year — over six-and-a-half times as much.”

Referencing the latest Employment Briefs data which showed information to the end of 2024, Dr De Couto said there were 1,436 fewer jobs for Bermudians and their spouses than in 2017.

There was only a passing mention of the Premier’s proposed controversial implementation of an income tax in Bermuda, which Association of Bermuda International Companies has warned against.

Dr De Couto said: “The Premier has floated the trial balloon of implementing an income tax in Bermuda.

“This reflects the reality that, given our debt and spending pressures, even with the CIT, this Budget only works over the next few years.”

On healthcare, the Opposition said universal healthcare coverage “is always ‘advancing’ but never appears closer’”.

Dr De Couto said: “So far, little has been done to address the underlying drivers of healthcare costs.

“Instead, the Government has increased the underlying premiums paid by everyone.

“While short-term relief is necessary, we echo the Tax Reform Commission’s call for fundamental reforms to reduce the actual cost base of the healthcare system.”

He added that the Opposition did not support the Government’s “blanket payroll tax break” for employers, saying that many large firms and international businesses can support the higher tax rates.

“The OBA would change the employer payroll tax to a tiered marginal system, as is the case for employee payroll tax,” Dr De Couto added.

“This will make it easier to give smaller companies payroll tax breaks.”

He said that the OBA would provide targeted support, while maintaining a focus on paying down debt.

The party would do so by “not wasting money, by targeting tax breaks for those who need them most, by being more efficient and effective, and above all by paying attention to Bermudians”.