Democrats to look at tax-free Bermuda
Bermuda’s booming economy faces being blown away by disgruntled US Democrats.
One lobbyist has likened the Island to a “parasite” for profiting from offshore US business by taking money that should be benefiting ordinary Americans.
And despite having a Bermuda resident as his wife, John Lundin is determined to lead the call for change in two States as Democrats amass political power.
He feels the tipping point may come as soon as 2008 if a Democrat is voted President. Earlier this month Democrats grabbed control of both Congress and the US Senate during the mid-term elections.
The clock is ticking and Bermuda needs to start preparing to readjust its economy before the seismic shift, warns Mr. Lundin.
A member of the Hawaii Democratic Party State Central Committee and staff aid to Hawaii State Representative Angus McKelvey, Mr. Lundin also has a strong connection with Democrats in Florida, where he was most recently resident.
“Bermuda is like a parasite sucking money from the US. You do not have the same tax structure and I can see why people in Bermuda think it is a good thing, but it is a huge loss of money for America,” he explained.
“It is unethical for American re-insurance companies to avoid their tax responsibilities by setting up tax shelters in Bermuda. It is immoral for the exempt companies to cheat on their taxes while average Americans pay extra to alleviate the burden. And soon it will be illegal.
“I am working with fellow Democrats to lobby the Florida and Hawaii Democratic delegations in the United States Congress to change this law. This issue should become part of the platform of the 2008 Democratic National Convention and the Presidential election.”
Mr. Lundin is not alone. He estimates 60 percent of Democrats and 20 percent of Republicans are opposed to the offshore tax breaks and claims the likes of US Senator Bryon Dorgan are advocates for changes to the tax rules for offshore US companies.
He will personally lobby the Congressmen in Hawaii and Florida he knows personally to raise the debate at the highest level of Government and knows of many others across the US doing the same. He claims Sen. Dorgan is “leading the charge” within the Senate.
And he is confident the issue will make the Democratic National Convention, with Mr. Lundin intending to take it there after securing it as part of the Hawaii Democrats’ platform.
At the same time he wonders how Bermuda will face up to the impact of such a change to its economy if the majority of the exempt companies leave.
He asks: “Will the cost of housing and office space drop dramatically? What will happen to the Bermuda jobs and businesses that support the exempt companies? Will the social fabric of Bermuda change? How will this effect tourism? I urge PLP, UBP and the Bermuda Government to start planning for this.”
Mr. Lundin admits his wife, who lives in Bermuda, is vehemently opposed to the idea of changing the tax rules for offshore US businesses, but he is sticking to his beliefs in lobbying Congress and his Party.
UBP Shadow Finance MinisShadow Finance Minister Pat Gordon-Pamplin said Government needed to make moves now to head off the threat.
She said: “Government needs to jump on this. It would effect the stability of our economy. I would hate to see anything threaten the insurance companies presence in Bermuda.
“A significant portion of our revenue is a result of these companies set up in Bermuda. Any decisions that are made that might minimise the tax advantages may impact on their choice to continue to operate on an off-shore administration.
“It is incumbent on Government to make representations in Washington D.C. and to be pro-active.”
And Democrat Congressman George K. Butterfield, whose father was a Bermudian, has also warned of the danger. He has vowed to fight Bermuda’s corner on Capital Hill.
He said: “Congress is faced with the challenge of huge budget deficits that have resulted in $7.6 trillion debt. There is no question that Congress will be looking at ways to increase revenue. The tax policy that allows US companies to avoid paying taxes will no doubt be debated in the upcoming Congress.
“It is imperative that the Bermuda government be proactive in its attempt to explain to Congress the devastating impact any change in the corporate tax code will have on the people of Bermuda.
“I have discussed this issue with Premier Ewart Brown and I am confident that he understands the need to have conversations with Congressional leaders in the very near future. I have pledged to him that I will help facilitate this dialogue when he is ready to do so.”
One hope for Bermuda comes from Mr. Lundin himself who, when asked what the likelihood was of the lobbying being successful, admitted it was probably 50/50 because of the counter-lobbying that wealthy, tax-exempt companies can themselves bring to bear on political leaders in Washington.
Tax-free Bermuda
