The Association of Bermuda International Companies (ABIC) has voiced its concerns over the growth of Government spending and debt loads, as well as tax increases announced in last week's Budget statement.

The organisation claimed there was nothing in the Budget to address international business's own needs, while the sector was being taxed more heavily to finance Government's plans. And ABIC warned that tax increases could encourage the trend of outsourcing to rival jurisdictions.

But ABIC, which represents more than 140 international companies incorporated on the Island, also praised Government's efforts to assist a larger cross-section of the community in areas such as education, housing and transport.

"We note once again that international business is by far the biggest contributor to the Bermuda economy, and that many of the new initiatives are able to be funded largely from the contributions of this sector," ABIC chairman David Ezekiel said.

"We also note that there are no specific allocations in the Budget which addresses the needs of international business, such as streamlining the work permit process," he added. "We would hope that due provision has been made for such improvements in the budgets of individual ministries."

Mr. Ezekiel admitted that a further rise in payroll taxes — the Budget raised the basic rate from 13.5 percent to 14 percent — which also falls on the employer, "is not a good sign".

"Payroll tax has now become the single major expense for many companies in the international business and local sectors," he said. "Especially hard hit by these increases are the 'service companies' in each of these sectors, whose major expense has always been payroll.

"Service companies are the lifeblood of any economy, and we would ask Government to ensure that these businesses are encouraged to grow."

To do otherwise, he added, would encourage the trend of increased outsourcing to jurisdictions outside Bermuda. ABIC has previously warned that the move to outsourcing will start to have a major impact on entry level job opportunities for Bermudians in the international sector, which is to be avoided at all costs.

ABIC also pointed out that the increased size of the Budget, which exceeds the projected growth of the economy, including inflation, and payments to support higher Government debt will have an impact the future health of the Bermuda economy.

"The substantial increase in borrowing and the total indebtedness of $465 million will start to have a significant impact on future budgets as debt service costs increase," said Mr. Ezekiel.

"We believe many efficiencies can be introduced in the public sector, and note with some concern that one in every seven employees in the Bermuda market is now an employee of Government — an inordinately high proportion."

In addition, he noted that his organisation would have expected to see some funds allocated towards improvements in postal service. Bermuda businesses and residents, he said, deserve a first-class postal service and much needs to be done to restore confidence in the postal service, "which has over the last decade become the carrier of last resort in Bermuda".

ABIC and its members, he added, "stand ready to assist Government in moving forward with sharing the benefits of our growth with the entire community, and we will continue to be a partner and a resource as we move forward".