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Chamber backs services tax 'in theory'

John Wight, the Bermuda Chamber of Commerce president, yesterday backed a new tax on services unveiled in last week's Budget.

Mr Wight said there was “ a great deal of alignment” between Chamber members and Government on the Budget plans to tackle the island's debt crisis.

He added: “Overall, it's a very sensible Budget and addressed the problems facing Bermuda. Addressing the Budget deficit is job number one for Government.”

Mr Wight was speaking at the annual Chamber of Commerce Budget breakfast, sponsored by PwC Bermuda, where Bob Richards, the Finance Minister, outlined his financial blueprint, which was unveiled in the House of Assembly last Friday.

He said: “It's inconsistent and illogical for goods to be taxed but not services.”

But he added that Chamber members would want to see more detail on the new tax, but “in theory” the Chamber supported it.

Mr Wight said: “The gap between the haves and have-nots has widened considerably in recent years.”

And he added that “had to be the subject of talks with international business over the next 12 months”.

He said that the retail sector was still struggling, despite some promising signs.

Mr Wight, head of insurance firm BF&M, explained: “If we strip out sales that came from pent-up demand over the years and more lending by the banks, retail is still pretty flat.”

And he added that he was not convinced some recovery in real estate was “a genuine improvement or that property had hit a price point that investors wanted to get back into the market”, while Bermuda had not been an attractive proposition for hotel developers for some time.

But he added: “Overall, sensible is the way to characterise the Budget and this is Bermuda's new reality.”

Mr Wight said that gross domestic product changed when “either or both of productivity and population change”.

He added: “Put another way, the only way we're going to experience measurable growth is if we become more productive and or we increase our population.”

And he said that automation would improve productivity — but lead to job losses.

Mr Wight added: “The only thing that is left is population.”

He said around 5,000 people had left Bermuda after the recession began to take effect after the 2008 crash.

“These people were generally in the 25-55 age category, they were healthy and helped to subsidise the less healthy work force. They are gone,” he added.

“We're now left with an ageing workforce, people like myself who in ten years will start drawing down on Government bank accounts rather than paying into them.”

And Mr Wight said the “primary objective” was to raise awareness “of this important, but emotive, issue. We can't shy away from it.”

Mr Wight said that the drive to achieve European Union Solvency II equivalence, to allow Bermuda companies to compete on a level playing field in Europe, had required trust and co-operation among Government, the Bermuda Monetary Authority and the private sector.

He added: “I am absolutely convinced Bermuda needs to have the same commitment to working together to addressing our serious demographic issues so our members can sell more goods and services to more people.”

The new services tax, expected to raise around $50 million a year, will exempt banking, insurance and healthcare, as well as small businesses.

Arthur Wightman, head of professional services firm PwC Bermuda, who moderated the panel discussion, declined to comment specifically on the GST.

He said after the meeting: “It's a new tax which is being introduced and we have already agreed to enter a process of consultation.”

He added: “Our broad comment on that would be we understand and agree there is a need to increase revenue in order to address the deficit and public debt.”

Money talk: Budget breakfast panellists, from left, are Bob Richards, John Wight, Martha Dismont, and Nathan Kowalski

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Published February 23, 2016 at 8:00 am (Updated February 23, 2016 at 12:18 am)

Chamber backs services tax 'in theory'

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