Introduction of an income tax for Bermuda could put companies off hiring or maintaining jobs on the island, an international business leader has warned.

In a statement today, Christian Dunleavy, chairman of the Association of Bermuda International Companies expressed broad support for the Government’s Budget Statement, including measures to reduce debt and improve the efficiency of social services.

But he added that a discussion of “a new personal income tax alongside a new and significant CIT requires careful consideration, study and extensive consultation”.

“A personal income tax, alongside the CIT, could be a disincentive for job retention and creation on island as well as a countermeasure to the recently introduced substance-based tax credit, the job-based benefit factor,” Mr Dunleavy said.

“Abic believes the immediate priority is onboarding and understanding the impact of the significant new taxes raised through the CIT without harming Bermuda’s competitiveness. This can be achieved with the continued good work of the teams at the Ministry of Finance and the Corporate Income Tax Agency, supported by close industry collaboration.”

David Burt, the Premier and finance minister, said in his Budget Statement last Friday that the Government intended to gather data needed to weigh the potential costs and benefits of a potential future income tax, in line with a recommendation from the Tax Reform Commission.

Abic represents more than 130 international companies with operations based in Bermuda.

“Abic, whose members are significant payers of the CIT and payroll taxes as well as key job creators, welcome the budget’s prioritisation of CIT revenue for debt repayment,” Mr Dunleavy added.

“Abic also supports the establishment of a Stabilisation Fund to reduce the expected volatility of the CIT over time due to industry concentration among the CIT payers.

“Additionally, Abic supports the utilisation of a portion of the proceeds for efficient delivery of social services, critical when so many members of our community struggle to meet the cost of living.”

He added that the CIT had transformed the Government’s revenues and presented an unexpected opportunity to reduce Bermuda’s debt burden.

“Reducing and eliminating debt servicing will free up existing budget room for social services and reducing other taxes, mitigating the need for the increase or creation of new taxes and fees,” Mr Dunleavy said.

“The cost and ease of doing business in Bermuda remain a key concern for Abic members and our desire to support job creation and economic growth in Bermuda in an increasingly competitive global environment.

“Expanding the CIT tax credits to payers beyond regulated insurers and reinsurers would be a welcome step.”

Mr Dunleavy added that Abic looked forward to “a robust consultation exercise on other areas of reform including proposed Universal Healthcare and social insurance reform.”