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International business issues warning over budget

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Budget Breakfast: Pictured- Christopher Schaper (Photograph by Akil Simmons)

International business has warned the Government that cost increases announced in the Budget could have “repercussions” for investment in Bermuda.

Christopher Schaper, deputy chairman of the Association of Bermuda Insurers and Reinsurers, said that added financial burdens to companies made it more difficult to bring “talent” to the island.

Mr Schaper said that government consultation over last week’s Budget should have happened earlier as he stated changes to the tax structure could increase costs by up to 20 per cent for business.

Budget Breakfast: Pictured left to right - David Burt and Christopher Schaper (Photograph by Akil Simmons)

He raised the issue as he spoke yesterday at a Post-Budget breakfast gathering of business leaders, which David Burt also addressed.

After the Chamber of Commerce Annual Budget Breakfast, Mr Schaper said: “I feel that we were just trying to be clear that over time, tax itself can be overly problematic.

“And, when you start increasing tax on the respective area of the economy that is considered to be the bedrock of the economy, it can have implications.

“And, so I wanted to just be clear that for Abir companies this is an important aspect of how we think about our overall costs.

“And, some of those changes can drive decisions and we wanted to make sure that was clear.”

Asked if the tax changes could lead to reduced investment in Bermuda, Mr Schaper said: “I think each company needs to make their own decision on how they are thinking through these different issues.

“I just think it’s important that government is aware that these changes can have repercussions and it is important that we are all talking about them well ahead of time if we are going to institute any change.”

Referring to the tax ceiling being raised to $1 million, Mr Schaper said: “It is just added cost, as you are starting to increase the bands themselves.

“And, not only were the bands increased, but the rate within the bands also increased, so, that needs to be also considered.”

He added: “When you add in additional taxes that are necessary on top of normal wages along with the overall expense that you have in Bermuda it can become more difficult to actually bring-in the necessary talent.

“In order for us to continue to be capable within our overall competitive position within the industry, bringing those individuals on board is going to be key.

“And, so as we think about the associated costs we just need to be cognisant of what that might mean over time from a competitive point of view.”

Budget Breakfast: Pictured left to right - Arthur Wightman, David Burt, Christopher Schaper, Myra Virgil, Stephen Todd, Nathan Kowalski. (Photograph by Akil Simmons)

Mr Schaper said the Government had engaged in consultation, but it should have happened earlier.

He said: “The consultation, however, was later than anticipated. In many cases Abir member companies set their own budgets up prior to the beginning of the year. When consultation happens subsequent to that it can cause difficulties from each member company’s point of view.

“I would say that the Government did listen and made some changes to what they were originally thinking, so that’s a positive.

“However, we do view that having consultation earlier would be beneficial for all involved.

“I actually think trying to figure out the housing issue is extremely important, and, I think the Government is trying to do that.

“If there is a way, to try to modify issues associated with housing. Also, how to modify issues associated with immigration costs, because that fee is going to be going up five per cent – so, if there is a way to modify that, then that would be beneficial, as we are trying to bring talent into the country.

“The Government has certainly been thoughtful about trying to think through any minimum tax issue that may be out there in terms of global minimum tax, so that’s positive, and they are also trying to think longer term about how to alter some of their current tax Acts that are in place. I think over time that could be helpful.”

Mr Schaper said that Abir was in favour of a “progressive” tax system.

Mr Burt told a press conference that the Budget did not increase the payroll tax liability for businesses.

Responding to Mr Schaper’s comments, the Premier said: “That would be his opinion.

“What I have stated inside of this Budget is that there is no increase to any employer payroll tax liability.”

The Premier insisted that the Government was pro-international business and had a good record of attracting foreign firms to the island.

Employee payroll tax rates for those earning less than $48,000 was set at 0.5 per cent.

For those between $48,000 and $96,000, the rate increased 0.25 per cent to 9.25 per cent.

For those between $96,000 and $200,000, the rate was raised to 10 per cent, for those earning between $200,000 and $500,000 it increased to 11.5 per cent and those earning between $500,000 to $1 million, it climbed to 12.5 per cent.

• This story has been updated to include comments from the Premier made in a Budget press conference after the Chamber’s event.

Budget Breakfast: The sold out Chamber of Commerce event heard concern that cost increases announced in the Budget could have “repercussions” for investment in Bermuda (Photograph by Akil Simmons)

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Published February 21, 2023 at 7:53 am (Updated February 22, 2023 at 8:03 am)

International business issues warning over budget

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