OBA: economy needs drastic action and tax reform to aid recovery
The One Bermuda Alliance has called for more support for Bermuda’s farmers and fishermen and for funding for school repairs or renewable energy schemes which would make Bermuda more self-sufficient and create jobs.
Cole Simons, the Leader of the Opposition, also said more private minibuses should be contracted to fill gaps in public transportation and capital support should be given to tourist properties in the wake of the local collapse of tourism as a result of the coronavirus pandemic.
Mr Simons was speaking after the GOvenrment released its Pre-Budget Report, which he said painted a “bleak” future for the island.
He said yesterday the OBA supported the Government’s decision to spend $125.2 million in unbudgeted funds to protect the most vulnerable.
But he added the predicted drop in Bermuda’s Gross Domestic Product would result in further job losses and economic hardship.
Mr Simons said: “The OBA strongly believes that if we have a healthy population, we can get back to having a healthy economy.
“However, we also acknowledge that we cannot escape our current reality.
“The fact still remains that Bermuda’s economy will continue to contract, given that our 2020 GDP is projected to fall between 7 and 9 per cent, according to the Pre-Budget Report.”
He added Curtis Dickinson, the Minister of Finance, was right to be concerned about the “unsustainable” $295 million budget deficit.
But Mr Simons highlighted that it did not appear that any measures were being taken to increase revenue or stimulate job creation.
Mr Simons said: “There are no opportunities in the agricultural and fishing industries to support food security, neither are there any opportunities mentioned to support our minibuses, which could resolve some of the constraints that continuously plague our public transportation.”
He added that there was no indication of spending to support school repairs and reorganisation, or to fund renewable energy schemes which could reduce the cost of living and create jobs.
Mr Simons said: “There are also no capital support indicators or concessions to help improve our tourism product and domestic tourism.
“Further, there was no mention whatsoever of how the government is going to address our airlift challenges.”
He added that the Pre-Budget Report had “not touched the Government’s multi-million-dollar accounts receivable portfolio across all Government ministries”.
Mr Simons said tax reform was needed and the Fiscal Responsibility Panel had found the island’s tax structure unsustainable.
He added: “In real terms, this means more taxes for the people of Bermuda, given that they believe that reasonable tax revenue, as a percentage of GDP, should be around 19 or 20 per cent.
“This is an increase of approximately $190 million dollars over three years.
“In addition, it should be noted that with the imminent embodiment of the Tax Reform Committee, a more fair and equitable tax structure is being examined, which will result in an increase in all our personal tax liabilities.”
Mr Simons said that tax reform was “normally unpalatable” but he had been told that leaders in the international business sector had signalled they would accept changes if the IB sector was not alone in facing increases.
He added that the international business sector wanted tax increases to be used to reduce the national debt and for the Government to cut costs and manage its expenditure.
Mr Simons said: “We believe that this chapter of Bermuda’s economic development is going to be a very challenging and difficult one for all of us and that we must brace ourselves for a rough ride.”
He appealed to the Government to develop a programme to balance the budget inside three years and to cut the size of Government through early retirement and attrition.
Mr Simons also suggested greater efforts by the Government to collect millions of dollars owed to it.
Other suggestions included increased funding for Bermuda College and Workforce Development to train Bermudians for available jobs, additional resources for the agriculture and fisheries industries to create jobs and a relaxation of immigration policies to attract job creators.
Mr Simons added: “In accordance with the reports and recommendations produced by the Fiscal Responsibility Panel and the Tax Reform Commission, and with feedback from the public, the OBA would examine, define, and implement the most equitable, fair, efficient and transparent tax system to serve the needs and people of Bermuda today and into the future and not a structure which was crafted to serve the needs of Bermuda’s past and its legacy.”