Many small businesses are set to pay more in employment taxes after benefiting for six months from an “unintended” payroll tax cut.

The rate for the employer’s portion of payroll tax for businesses with an annual payroll of under $200,000 is set to double from 0.5 per cent to 1 per cent, reversing the reduction that took effect on April 1 this year.

MPs approved the hike last Friday by pushing through the Payroll Tax Rate Amendments Act 2026, which was approved in turn by the Senate yesterday.

David Burt, the Premier and Minister of Finance, told the House of Assembly: “We did something wrong. We messed it up and we’re changing it.”

In Mr Burt’s 2026-27 Budget statement this year, he left the employer’s rate for businesses with a payroll under $200,000 unchanged at 1 per cent for a fourth successive year.

However, that policy intention was not reflected in the subsequent legislation, the Payroll Tax Amendment and Validation Act 2026, which included a reduction to 0.5 per cent for this band. After it was approved by the legislature, the unintended tax cut took effect from April 1.

Mr Burt, who is stepping down as Premier and finance minister next month, said that rather than leaving the issue to his successor as Minister of Finance, “I will take it on the chin, act responsibly and deal with this particular matter.”

The 1 per cent rate will be restored, effective from October 1.

Shadow finance minister Douglas De Couto, of the One Bermuda Alliance, said the tax increase would have a negative financial impact on entrepreneurs and small businesses and he could not support it.

In response to questions from Dr De Couto, Mr Burt said he did not know how many taxpayers would be affected, but that the revenue resulting from the change would be about $800,000 on an annual basis.

Ben Smith, the Opposition leader, said yesterday: “We voted against Premier Burt’s bill, which will only bust Bermudian businesses. Yet the PLP backbench voted for their party instead of the Bermudian people.”

The tax increase was approved in the Senate yesterday. It was supported by the government senators, as well as president Joan Dillas-Wright and vice-president John Wight, while all three opposition senators opposed it.