Gazette readers have their say – The Royal Gazette | Bermuda News, Business, Sports, Events, & Community

Log In

Reset Password
BERMUDA | RSS PODCAST

Gazette readers have their say

Prior to the Budget, we asked for people to take part in a Readers’ Forum to give us a range of reaction from members of the community on what they thought of its contents.

Here is that reaction:

Danny Matthews wrote: “So much one can say but so little space to say it. One must remember that this is simply a Budget speech, written, no doubt, to prepare the Island for an election. Rhetoric aside, the Premier/Finance Minister continues to blame external factors for the poor state of our economy without offering up any form of apology or even acknowledgment that maybe, just maybe, the Government may have made one or two (hundred) ‘errors of judgement’ in its handling of the economy that it will address going forward.

“My overall impression of this Budget is that it has attempted to be all things to everyone. I was pleased to see moves to fine tune the benefits granted to our seniors, particularly the abuses so apparent with the exemption to the TCD licencing of vehicles. On the downside, however, all I see are declining revenues taken against a backdrop of a Government unable or unwilling to make tangible reductions in expenditure.

“I accept the Government argument that, at this time, it finds itself as the primary engine of the economy and obliged to maintain employment levels by any means it can. The whole concept of increasing the debt ceiling to fund vague promises to maintain the social fabric of the Island may sound good, but I fail to see any mechanism to ensure the allotted monies will be spent effectively and ethically. Raising money with a Bond Issue makes sense if we have faith that the Government is good for the money, after all, just listen to what is happening to Greek Government Bond holders.”

Clinton J A Paynter said: “In my opinion this has all the hallmarks of a an election Budget, the hard decisions that we know have to be made have been deferred to a later date. It is very concerning that our budget deficit continues to grow at an alarming rate when for the past year we have supposedly ‘Reset the Dial’ and ‘Done more with Less’. It comes as no surprise, then, that the statutory debt ceiling will be raised from $1.25 billion to $1.45 billion if Government jobs are to be retained.

“It is good to see that payroll tax will remain at 14 percent ... we can assume something was learned when the recent increase to 16.5 percent actually reduced revenue instead of increasing it as anticipated. Thumbs up as well for the continuance of payroll tax concessions for the struggling retail, hotel and restaurant sectors.

The most interesting aspect of this budget for me is the personal import duty “harmonising” at all ports of entry at 25%. This means that clothing which attracted a duty of 6% will be increased to 25% ... That’s an increase of 317%! Personally I believe that there will be push back from Mr. and Mrs. Bermuda in this area. I am sure this is due to the recent lobbying by local retailers. They would have us believe that increased purchasing online and overseas by returning residents has led to plummeting local sales ... 44 consecutive months to be exact. If this is the case, why are both local retail AND overseas purchases down? Seems more likely there are simply a lot less people here. Punitive tax increases are not the answer.

One Readers’ Forum participant added: “My wife and I have a very ordinary Class E car, which we bought on the understanding that there would be no annual tax. So I guess that I’ll now be paying nearly $1,000 a year out of my fixed pension! Things have come to a pretty sad state of things when government has to tax Seniors to pay for years of reckless overspending and a bloated civil service!

And another said: “I’m happy with the airport duty and other duty changes and normalisations, but would like to highlight the instability of policies. Flip flopping creates more uncertainty. The land license reversal is another similar and hugely aggravating flip-flop.

“I expect since they have not correctly projected the shortfall in various incomes, especially payroll tax, that their projections will be wrong again leaving us with a whopping larger deficit of another $250-plus million. Bankers have predicted this year will be worse than last many employers are just hanging on.

“I disagree with her austerity remarks and I think there needs to be a reduction in government jobs. It need not be sharp, but through attrition and selective. It’s much the way the private sector has been and is doing.

“Sales figures on many local industries have fallen by more than the few points the government refers to in GDP. I don’t think government is feeling the same pain the rest of the local companies are. I certainly don’t agree with her statement that debt is a natural and unavoidable part of economic life.”

Tia Hartmann wrote: “Much was speculated about this budget before today. Would this be an austerity budget, normally produced during times of hardship which most would agree we are in. Would this be a so-called “sweetheart” budget designed to garner votes for the upcoming election? Sadly for us, and even more sadly for my children, it appears Madam Premier bowed to the pressure of producing a budget designed not for the betterment of Bermuda’s bottoming economy and our future but for the continuing legacy of ensuring their party remains the government.

“It is a fact that the global economy situation has caused a likewise recession in Bermuda. We had no control over that. What we did have control over is our response to that event. And for another year running, our response has been lacklustre and will ensure that our Bermuda recession outlasts that of some, not all, other countries. The problem isn’t so much the size of the budget, over one billion again this year, it’s that we consistently are overspending this budget whilst receiving increasing smaller than projected revenues. Budgets should be an estimate, yes, but this seems more like a shot in the dark at times.

“The Budget isn’t all bad, what little there is of it. Some highlights for me include the removal of stamp duty in cases of mortgage refinancing, the adjustment of seniors tax exemption for cars, funding for local entertainment.

“In fact, there really wasn’t much bad about it. Unfortunately in order to raise ourselves out of this hole we are in there needed to be some bad. I’m not a fan of the raising of the debt ceiling, however, in this we really have no choice because instead of cutting, it seems we’ve just continued with “business as usual” with the added component of trying desperately to justify why we can’t cut back. Apparently, we have to build each other up, together. So why do I feel let down?”

Another member of the Forum added: “I wasn’t clear if the debt ceiling increase included the bond issue? I would assume that it did. I just can’t see Bermudians investing their savings in Bermuda Government bonds when the present Government is so irresponsible in managing the country’s finances, no matter what they think they can offer as an interest rate.

“In general, we should not be increasing the debt ceiling to fund current expenditure. Not only are we borrowing, we are also mortgaging our future savings by financial manipulation with the suspension of pension contributions.

One statistic that she failed to state was the ratio of public servants (both the official roster PLUS all those that are “on contract”) with the total work force versus other developed economies. That is a very, very telling statistic!

“Some people spent their lives building a home of which they could be proud. Their savings were poured into their homes. They have already lost tenants due to the scare tactics of the PLP is chasing away foreign workers and tenants, now they aren’t going to even get land tax relief on their own homes!

“The Budget will not stimulate the economy..... I heard absolutely no substance for new growth of job creating whatsoever. It is surely an election budget and once again the PLP have put their quest for power before the needs of the country.”

One panellist wrote in to say: “This is a ‘look busy’ Budget. No real changes are being made to address the gap between spending and income.

“Any mention of debt/GDP ratios is misleading for Bermuda and comparisons to countries like Japan or the US are totally inappropriate as they have their own currency. We are more like Greece or Spain in that we are tied to make our debt payments in a currency we don’t control and the relevant measurement for us the dollar value of the debt service cost, currently on the order of $2,500 per working Bermudian and set to double in the next several years.

“So with costs set to exceed $100 million per year for debt service alone that eats up ten percent of government’s available revenue.

“This Budget provides no real action for a return to a balanced budget and without some truly hard decisions the cost of debt service will continue to increase and in only a few years will be eating up 20 percent of available government revenue. If these trends continue then within a few years only $800 million of revenue will be available for local services, and $200 million will go to debt payments.

“The PLP still appears in denial about the real source of Bermuda’s recession, which has been the loss of thousands of 365 day-a-year tourists in the form of international guest workers affected by term limits. There will be no turnaround until term limits are repealed. The damage from term limits has mostly occurred and so it’s possible that we will return to nominal small levels of economic growth that will be the new normal.”

This forum member wrote: “The exemption from private pension contribution for the next 12 months was to be expected given the exemption afforded to the government workers. The price to be paid is much higher for those in the private sector. Unless they double up on the contribution next year, their final pension amount will be materially impacted.

“For government workers, they will receive the same benefit, whether they miss one, two or even three years of contributions.

“They are defined benefits. Their benefits are defined by final salary or the average thereof for a period of time immediately preceding retirement. The difference in impact is huge. I hope people realise it.

“I like very much the stamp duty elimination on mortgage transfers. This will help to keep the banks competitive with respect to rates. Government needs to go one step further though although I recognise they can’t do it legislatively. The banks must narrow the spreads they receive on mortgages.

“Bermudians paying eight or nine percent for a mortgage when the 30-year interest rate on a mortgage now in the US is only 3.50 percent is criminal. If the banks reduce the spreads and then refinance the problematic mortgages, this will present a huge pool of discretionary/spending money to the economy.”

This forum member said: “As Bermuda needs to create employment across all sectors and, in my view, more so at the ‘lower-end’, the extension of the payroll tax concessions in the hotel, restaurant and retail sectors is welcome news because those are the areas of potential employment for a large percentage of our working population and the only way to create jobs in these sectors is to get them moving and to do that means controlling the costs of business.

“With regard the voluntary suspension of pension contributions, I am not completely sold on this, however, as long as those who choose to take advantage of this only do so out of pure necessity and not look at it as being able to purchase material items, then it should really be no harm.

“Looking at it from a purely economic perspective, IF those who take advantage of it decide to “splurge” it could have a positive economic stimulus impact by driving sales. I am, however, wary of persons deferring long-term benefits for short-term “pleasures”.

“When time permits will go through the Budget in greater detail but this is an overview based on my skimming of the document. Many will call this an election Budget and it probably is but I think history will show that every Government offers an election Budget when an election is imminent.”

Lastly, this Forum member said: “To state that the objective is to ‘reduce waste and inefficiency’ are patronising words after a long spree of extravagant financial waste and to which this Premier/Finance Minister has had and continues to have control of the purse strings.

“The ‘this new approach will allow us to do more with less’, was a very short time ago evidenced by a ‘We will do less with more’ practice and mindset. All of the SDO’s are a prime example, not to mention cronyism, extravagant trip, wasteful and unchecked use of credit cards and government issued vehicles, etc”

n

If you want to take part in future Readers’ Forums e-mail jdeacon[AT]royalgazette.bm

Michael Scott looks over his speech moments before the post budget press conference at the Cabinet Office yesterday afternoon.

You must be Registered or to post comment or to vote.

Published February 25, 2012 at 7:31 am (Updated February 25, 2012 at 7:30 am)

Gazette readers have their say

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon