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

The concern came hours after David Burt, the Premier and Minister of Finance, emphasised his support for a shake-up in Bermuda’s tax base by moving to a personal income tax system.

Speaking at the Chamber of Commerce’s Budget Breakfast, Mr Burt insisted change was needed in how Bermuda collected taxes from its citizens to spend on the collective good.

“It is a needed change that we have to press forward with,” he insisted. “I am grateful that the tax reform commission has recommended it and I think it is important that the business community, the unions and everyone else lean into this conversation, discussion and do it.

“The tax system is very unfair,” he told a room full of business leaders, labelling it “antiquated” and “regressive”, albeit “efficient as hell”.

He advocated the adoption of income tax and said it would lead to the removal of payroll tax and customs duties.

Last year, the Tax Reform Commission reported a strong belief “that Bermuda should explore the merits of a low-rate, broad-based income tax system”.

In a statement yesterday, Christian Dunleavy, the 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.”

The Government intends 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. The Premier said that could take three years.

In terms of income tax, he added: “In the medium term, if we are serious, it will have to happen.”

He said that it was difficult to provide targeted, individual relief under the present tax system. Various measures had been tried, but they had been difficult and cumbersome for the Government to execute.

“If you have income tax, you can appropriately target relief.”

Asked if income tax would replace payroll tax, he said he had been opposed to payroll tax as a job creation disincentive, adding he had spoken against it in his first speech as a senator.

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”.