Budget brings investment in the people and an end to austerity
The end of austerity is upon us as the 2025-26 Budget marks a “turning point” for the island’s finances that spells investment in the people, David Burt said.
The Premier announced that a balanced Budget had been achieved and said the Government was committed to investing in education, healthcare and infrastructure, while building a surplus to prepare the island for “turbulent global waters”.
Mr Burt unveiled a raft of tax breaks, which he said remained true to the Government’s mission of “fairness, opportunity and dignity for all Bermudians".
An “ambitious recovery”, he said, would be led “not with austerity, but with investment in our people”.
“Yes, we will still carry debt, but now, for the first time in a generation, we are positioned to repay that debt, build up our reserves and make investments for the future amid a time of global uncertainty,” the Premier said.
“Today, I declare that the era of Budget deficits has come to an end.
“The 2025-26 Budget marks a turning point for Bermuda. This is not just a new Budget year, it is the beginning of our economic growth.”
Mr Burt said that the predicted surplus for the Consolidated Fund for the fiscal period 2024-25 was $19.5 million more than originally estimated, representing the first surplus in 21 years.
“Such a milestone is not just a testament to this government’s commitment to fiscal responsibility but it is a culmination of many years of fiscal discipline,” the Premier said.
Debt service costs for the 2025-26 Budget are projected to be $127.5 million, largely in line with the past fiscal year.
Consolidated Fund expenditure is expected to be $1.11 billion, an increase of $118 million compared with the original estimate for 2024-25.
Mr Burt said revenues were expected to reach $1.43 billion — 16 per cent or $198 million above the original estimate for the previous fiscal year — with an $11 million increase in payroll tax receipts expected through job growth.
Among the tax breaks outlined was a reduction in customs duty on building materials and supplies to 10 per cent, helping to boost development.
Mr Burt said: “The goal is simple — to reduce the cost of building and renovating homes to help stimulate economic activity in the construction sector.”
The duty changes take effect from July 1 and are expected to reduce customs duty revenue by $4.6 million.
With the cost of living still hurting the average Bermudian, Mr Burt said the Government was doing everything in its power to reduce costs for households and businesses.
He said the Government would reduce fuel duty to four cents per litre and the average customer would see a $300 per year reduction in their Belco bill.
“This demonstrates the Government’s commitment to delivering a sustained relief on energy costs.”
The newly formed Ministry of Housing and Municipalities has been allocated $7.5 million, an increase of $1 million or 15 per cent.
Mr Burt said as part of efforts to provide affordable housing, capital funding to the Bermuda Housing Corporation had increased by $4.2 million to $17 million.
“These funds will continue the record investment in affordable housing made by this government and are expected to support the delivery of 30 additional affordable housing units in 2025,” he said.
The elimination of customs duty on all motor vehicle parts was also announced. The move, which takes effect from July 1, is expected to reduce customs duty revenue by $2.9 million to $214.9 million.
There are further reductions of 10 per cent on licensing fees for private cars.
Mr Burt said: “This will provide further relief to families by lowering both the upfront and ongoing expenses of keeping a vehicle on the road.”
Duty exemption for returning residents was increased by 5 per cent from $200 to $300 and a 50 per cent reduction in the monthly tax on mobile phones from $12 to $6 was implemented.
The base rate of land tax will be reduced from $300 to $150 effective January 1, 2026 with an expected revenue hit of $2.5 million as a result. Land tax collections are estimated at $87 million, representing a 5 per cent decline compared with last year’s estimates.
Two breaks that had been announced in the Pre-Budget Report have been deferred to ensure “fiscal responsibility”, Mr Burt said.
These are the elimination of payroll taxes for employers who retain Bermudian employees over the age of 65 and an increase in the tax-free threshold for local dividend income from $10,000 to $15,000.
The measures will be revisited in the 2026-27 Budget, the Premier said.
The first instalment of the corporate income tax will be collected in August and the Budget includes estimates of $187.5 million.
The Premier said the revenues would allow “sufficient headroom to support any variability in receipts and, as necessary, adjustments to payments made”.
He said that the Corporate Income Tax Agency set up to administer the new regime, given an operational Budget of $4.78 million for 2025-26, was implementing a Tax Administration Platform.
“This platform will provide a modern digital interface so that taxpayers can liaise effectively with the CITA,” Mr Burt said.
“The CITA’s mandate is tasked with balancing the effective collection and determination of tax liabilities.”
Mr Burt said that more funding would be required this year to support the successful implementation of an IT system infrastructure as well as staff and other resources.
He said the Government was committed to introducing universal healthcare with the Budget allocating an additional $56.25 million.
He said $22 million of that additional funding would be for the Bermuda Hospitals Board and there was a $42.1 million operational grant for the Mid-Atlantic Wellness Institute.
Additional funding will increase the coverage limit for HIP from $1,000 a year to $3,000 and increase the FutureCare limit from $3,000 to $5,000 a year, and there will be an expansion of coverage for annual health exams for the clients.
The Budget makes a provision for capital expenditure of $149.8 million.
“By investing in physical and digital infrastructure, the Government can improve public services, foster job creation and improve productivity in the public sector,” the Premier said.
The lion’s share of the capital funding will go towards much needed roads infrastructure and the installation of a new asphalt plant, affordable housing, upgrades to the Tynes Bay Waste-to-Energy Facility, King Edward VII Memorial Hospital, and the start of the replacement of the Swing Bridge in St George’s.
“Maintaining and improving road infrastructure remains a priority, with $5 million allocated again for road paving,” Mr Burt said.
The Ministry of Education has been allocated $149.2 million, an increase of $9.8 million.
This includes a 26 per cent increase in substitute teachers to support education reform.
Mr Burt said the Ministry of Finance would turn its attention to securing the long-term sustainability of Bermuda’s Contributory Pension Fund, but added: “Until a full social insurance reform package is implemented in 2026, that continued commitment, while necessary to protect our seniors, also means there must be increased contributions.”
• To view the 2025-26 Budget Statement in full, see Related Media
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