New capital gains taxes on the cards in Throne Speech
Major changes to the tax system and the introduction of a levy on capital gains were today signalled in the Progressive Labour Party’s Throne Speech blueprint for the next legislative year.
The Throne Speech added legislation would be tabled to alter the terms of Permanent Residents Certificates to require successful applicants to make economic investments or contribute to the new Bermuda Trust Fund, which will be set up to “benefit those who have not had the benefit of historic, inherited wealth”.
It said that the Government would also ask the UK for changes to the Constitution which would “focus on achieving a revised Constitutional model that provides the Government with flexibility needed to best advance Bermuda’s economic growth”.
The Government highlighted the Fiscal Responsibility Panel’s latest report, which warned of an “unbalanced focus on taxing wage incomes rather than capital incomes”.
The panel added it was “essential” to reduce taxes at “the bottom of the pyramid” and extend them for people with “significant capital income assets”.
John Rankin, the Governor, who delivered the speech, said: “During this session the Government will lay the foundation for the necessary changes to our system of taxation, which currently exacerbates economic inequality while stifling much needed economic growth.
“The inequity laid bare by the pandemic’s impact cannot be an accepted feature of the new economy – therefore the Tax Reform Commission will be invited to update its recommendations made in 2018 in light of the new economic realities created by the pandemic.”
Mr Rankin added that many of the problems faced by Bermudians, such as the cost of living, job creation and economic growth could be improved by economic policies “linked to progressive immigration reform”.
He said: “Therefore, the legislature will be invited to consider revisions to the Bermuda Immigration and Protection Act that will advance comprehensive immigration reform by providing a framework for persons to obtain permanent residency in Bermuda.”
A Bill to set up the Bermuda National Digital Bank, as well as make changes to banking law and regulations and to establish a Bermuda base interest rate, will also be introduced.
Mr Rankin said: “Shares in the Bermuda National Digital Bank will be available for Bermudian ownership, providing an opportunity for a new generation of investors to create lasting wealth by supporting the next wave of financial services, connecting Bermudians to the global world of digital payments.
“The reform of banking laws will increase competition in this sector, introducing new classes of banks to Bermuda to boost the economy and harmonising the Bermuda base rate charged by local banks, while working with these banks to reduce the interest rates charged on mortgages.”
The speech added that changes would be made so first-time buyers could use part of their pension to fund a down-payment on a home.
It said: “A new generation of Bermudian owners will be urged to use this opportunity to transform the City of Hamilton into a living city again.
“Concurrently, these new owners and existing mortgage holders will be protected by a Bill to mandate enhanced consumer protections for loans and mortgages.”
Mr Rankin, added in the speech, delivered in St George, the first capital of the island, to mark the 400th anniversary of the founding of Parliamentary democracy in Bermuda, that the cost of healthcare would be cut with the establishment of a national drug formulary.
He added: “This will permit maximum prices to be set for the most frequently prescribed medicines, reducing costs to patients and providing relief to those on fixed incomes.”
A new Office of the Public Guardian was also proposed to provide services and support to seniors, children and other vulnerable people when they were unable to make decisions for themselves in the management of their health, financial or legal affairs.
Mr Rankin said: “The outdated Child Care Placement Board will be replaced by a Children’s Commission, whose remit will be to advocate for the children in care, promoting best practice policy, programmes and service responses to meet their needs.”
He added the legislature would also be asked to consider a “national seniors strategy” with “particular emphasis on dementia care and a prevention plan for seniors’ abuse”.
Independent Living Coordinators will also be introduced to draw up “individual plans for our young people coming out of care, to provide affordable housing options, postsecondary education and career advice, as well as access to physical and mental healthcare”.
A Bill to create a Police Authority will also be introduced to create “an open and collaborative forum” to support the Bermuda Police Service and the public it serves and a national crime prevention plan will “focus on prevention, rehabilitation, and reintegration”.
Changes to the Financial Assistance system,, designed to help the unemployed to save and build assets, are also in the pipeline.
Mr Rankin said: “The reforms will include the ability of recipients to retain 50 per cent of child support to defray child-related expenses and will also permit recipients to receive other assistance up to $2,500 for household expenses, both without penalty.”
He added: “Having secured a convincing mandate from the people of Bermuda, the Government is determined to drive a movement of change for the island.
“In quiet moments we may yearn for a return, but in that normal, too many Bermudians lacked the chance to build for their families that which some inherited as a matter of right and too many Bermudians were denied the tools to break a cycle of multigenerational trauma and violence.
“To that normal we will not return.”
The East End will also get more attention, with Bills to grant a leasehold interest in the St George’s Club to the developers of the St Regis Hotel on the old Club Med site.
A Bill to back the construction of a marina in St George is also on the cards.
Mr Rankin said: “Additionally, municipal reforms for the Corporation of Hamilton and St George will be advanced in this session.”
He added, in the traditional personal message attached to the Government agenda, that this would be his last Speech from the Throne as he prepared to move to a new post in the British Virgin Islands next month.
Mr Rankin said: “I have much to do in my remaining weeks in office. But I will depart Bermuda confident that this island will find a way through the future challenges it will face, as it has managed and overcome current and past challenges.
“That is partly due to our strong institutions, including this elected Assembly, our Government and our independent judiciary, operating within a clear separation of powers, helping to protect individual human rights and ensuring the rule of law.”
But Mr Rankin added: “Above all, however, it is due to the inventiveness, commitment and determination of the people of these islands in all their diversity, which we have seen come to the fore this year, to perhaps a greater extent than in any period since World War Two.
“I pay deep tribute to our medical and health staff, our emergency services and all those who have helped to keep Bermuda safe in the past year.”