Representatives of the island's business community urged the Government to maintain a “conservative approach” to managing the economy after projections made in the Budget Statement.

The Bermuda Chamber of Commerce said the Government’s surplus and capital investments were a welcome sign.

However, it said the fluidity between rising operating expenditures, early stage corporate income tax revenues and the island’s $2.123 billion unfunded pension liability “demands careful stewardship” and “must be viewed through a lens of long-term prudence”.

The chamber was responding to the Budget Statement delivered by David Burt, the Premier and Minister of Finance, on Friday.

The body said the cautious approach was necessary since CIT revenue projections had been revised downward from $750 million to $600 million, and the Sinking Fund was projected to fall $18 million short by March 2027.

The business umbrella body also urged the Government to address a “longstanding inequity” in taxes for restaurants, in which full-service eateries get a lower rate than establishments offering takeout services.

While it commended the Progressive Labour Party government for achieving a $19.7 million surplus for the 2024-25 fiscal year, the chamber said a $54 million increase in net debt suggested $73.2 million in non-budgeted spending, giving rise to concerns about fiscal transparency.

It said a shift from fully repaying a $605 million bond due in January 2027 to a partial repayment plan of “up to $500 million” marked a departure from the recommendations of the Fiscal Responsibility Panel.

Last December, Mr Burt said the corporate income tax windfall could help to fund the $605 million payment on Bermuda’s $3.2 billion debt.

The chamber said the CIT — which it deemed a cornerstone of Bermuda’s tax reform strategy — marked an important step towards fiscal sustainability, along with the budget surplus.

It warned that a 10 per cent revenue shortfall in CIT could expand the island’s debt gap to $91 million, jeopardising repayment plans.

“We reiterate the importance of prioritising CIT revenues for debt reduction and publishing transparent financial projections,” it stated.

It highlighted that during the pandemic, full-service restaurants had operated primarily as takeout providers, with many continuing in hybrid form.

It said the matter was raised with the Government on several occasions but with little progress.

It explained: “Under the current system, full-service restaurants — many of which benefit from higher-margin alcohol sales — are taxed at a lower rate than takeout-oriented businesses.

“Although these functional distinctions predate the Covid-19 pandemic, the pandemic made the inadequacy of this model clear.”

It said the disparity heaped “disproportionate burden” on smaller and newer restaurants, which are often owner-operated and more vulnerable to fluctuations in cost and demand.

“It creates confusion, breeds frustration and institutionalises an unfair competitive environment,” the chamber said.

The body called for an immediate review and modernisation of restaurant classifications and tax treatment to ensure equitable and consistent application of the island’s tax policy.

From 2019 to 2024, the chamber said the island’s gross domestic product grew by 8 per cent, which it credited to a 43 per cent rise in external balances of goods and services.

However, domestic capital formation declined by 18.7 per cent and final consumption grew only 1.4 per cent.

The chamber said this indicated “subdued local investment and modest consumer confidence”.

Last month, the Ministry of Economy and Labour said the island’s inflation rate stood at 1.9 per cent in 2024, demonstrating a continued moderation of the average rate of price growth.

The chamber said although the figure appeared favourable relative to global benchmarks, it did not reflect Bermuda’s “true cost-of-living pressures”.

It added: “We call for a more accurate and comprehensive approach to inflation tracking and affordability analysis.”

The chamber also urged the Government to provide more details on plans for a $56 million investment in healthcare.

It called for a “prompt review” of closed and restricted job categories to reflect labour needs.

The chamber advised the Government to establish transparent capital project milestones and timelines, and to develop a structured plan to address pension sustainability.

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Chamber response to 2025 Budget Statement .pdf

• To read the statement in full, see Related Media