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Payroll tax cut? ‘In your dreams’, says Premier

Premier Paula Cox told businesses in Bermuda to ‘keep dreaming’ about getting a payroll tax reduction today at the Chamber of Commerce’s Budget breakfast panel discussion hosted by PwC.

“In your dreams”, she lightheartedly said to a chuckling crowd when asked by the panel moderator whether there was any chance of a reduction.

When questioned about whether she would consider austerity measures to help Bermuda’s struggling economy, she said that once businesses were back on their feet, then she might consider taking away the “crutch” of concessions for the hospitality and retail sectors.

She added that the Government could have saved $21 million by not giving out business concessions, but reiterated the Government favoured growth over austerity measures.

“There can’t be any guarantee going forward,” she said of continuing concessions.

The Premier also stated that she needed to strike a delicate balance between budget measures and social responsibilities, saying that she could “easily make a budget perfect” with austere cuts but then that would create “social angst”.

In 2012, the Government’s aim, she added, is to “not do further harm to the economy”.

Peter Everson, economist and chair of the Chamber’s Economic Committee and Wayne Caines, CEO of Digicel Bermuda, were also on the panel. Mr Caines is a member of the executive committee of the Chamber and was representing the business community at the event.

In his speech he said that Bermuda needed to reduce spending, cut costs and have a “clear plan for the future” to increase revenue.

“It must be noted that as of March 31, 2011 the Government’s revenue deficit stood at $254 million,” he said. “Even with borrowing from the Sinking Fund and pension plan, the Government will still be short $172 million in 2013, with no viable means of repayment.

“There must be a refocused, lean civil service, cutting jobs through attrition will not be enough. There must be a cut in pay for civil servants and MPs. I know that talk of cutting jobs and salaries in the civil service is not easy and is never popular. But the fiscal times in which we are living call for such measures.”

He offered “out-of-the-box” revenue-generating ideas, including privatising LF Wade International airport and the ferry service, long-term leases for small uninhabited islands and generating income from satellite orbital slots through administration fees.

Caroline Foulger, PwC partner, moderator for the event called for every Bermudian to be an ambassador for the Island and to focus on the positive rather than the negative.

“Bermuda is a special place we all know that however the things that made Bermuda special in the past are not always the same things that will make Bermuda special in the future,” she said.

Mr Everson explained that to help Bermuda’s economy, there needed to be more people working here, saying the number of jobs in the international business sector have declined more than 14 percent from 4,761 jobs in 2008 to 4,077 jobs 2011.

“We need more people working in the private sector making profits,” he said, adding that with more expat workers it helps to pay taxes, service Bermuda’s debt and sustain the lifestyle that many in Bermuda have come to expect.

He also added that it was “heartening” to hear that the Government is planning to review the defined benefits plan, saying that the country can’t sustain it and is courting a “social disaster”.

Mr Caines said that Bermudians have a can’t-live-with-them, can’t-live-without-them type relationship with international business workers.

“As much as Bermudians have a love/hate relationship with the expatriate worker, we are now realising with the exodus and many having their apartments empty, that we need each other and there has to be a symbiotic relationship,” he said.

Budget banter: Pictured on the panel at yesterday's Chamber of Commerce breakfast are (from left) PwC partner Caroline Foulger, Premier Paula Cox, Chamber of Commerce Economic Committee chairman Peter Everson and Digicel Bermuda CEO Wayne Caines

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Published February 28, 2012 at 1:00 am (Updated February 28, 2012 at 7:50 am)

Payroll tax cut? ‘In your dreams’, says Premier

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