Construction firms are to get a tax break to help boost jobs and attract foreign investment.

Finance Minister Bob Richards said the scheme would be targeted at major projects like hotels.

“Direct foreign investment is going to be one of the critical ways in which we dig ourselves out of this economic stagnation that has seen job losses and business closures during the last five years,” he said.

“We must attract foreign capital to our shores that will provide jobs not just in the construction industry but all the other sectors that benefit from a growing workforce with more money to spend and invest in our local economy.

“The Bermuda Government can’t finance the projects and create jobs but we can provide a climate conducive to job creators to bring their capital, expertise and experience to get our economy moving again.”

He told the House of Assembly that construction employers carrying out work on a designated project will be charged a cut-rate payroll tax of 5.25 percent.

“The payroll tax cost to the construction company will be zero if the employer decides to deduct the full recoverable rate of 5.25 percent from the employee as normal.”

Mr Richards told MPs that the building industry had lost at least 1,200 jobs in the last five years.

He said: “The proposed relief for the industry is intended to maintain existing business operations, promote job creation and attract much-needed foreign investment.

“The construction industry makes a vital contribution to the competitiveness and prosperity of the economy and is often the subject of much-needed foreign investment.”

He added that eligible works of “national importance” would be approved by Government’s Economic Development Committee.

“The proposed relief forms another part of Government’s plan and efforts to promote job creation in our economy, specifically Bermudian jobs,” he said.

“Its purpose is to reduce the marginal cost of hiring a construction worker without cutting the remuneration of that employee.

“It reduces the ‘overhead’ that construction workers have to pay for each construction worker thereby reducing the overall cost of a project to a potential developer.”

PLP MP and former union leader Derrick Burgess asked if any tax breaks for employees had been considered.

Mr Richards said that cutting costs for employers meant that “the benefits workers get is a job” and that Government had to balance tax breaks against the cost of Government and debt.

He added: “When people are looking at developing in Bermuda, they are very cost sensitive. Bermuda is not only an expensive place to operate in but to build things in.

“We are looking at ways of trying to assist in that.”