Motorists, drinkers and smokers to pay more tax
Motorists will have to fork out more to get their vehicles on the road while smokers and drinkers will be encouraged to cut down on their vices through tax increases proposed in yesterday’s Budget.
Finance Minister Bob Richards said Government was reluctant to ratchet up taxes for fear of stifling spending in an already “stagnant-to-weak economy” and as a result, most tax rates would remain unchanged.
He also urged taxpayers to keep up-to-date with payments revealing that Government was still owed “large sums” in unpaid taxes.
“Government has found itself in the difficult position of, on the one hand, needing more revenue to pay for its operations and debt service, while on the other hand, not wanting to cripple the economy further with major tax increases,” Mr Richards said in his Budget statement.
Economists estimate that Government can expect to earn around $871 million in the next year, with payroll tax contributing $320 million to that total. Other big earners for Government will be Customs duty ($175 million), land tax ($59 million) and companies fees ($56.7 million).
Vehicle licence fees will rise by three percent, increasing the cost of licensing a Class A vehicle from $281.05 to $289.45. The cost of licensing a Class D vehicle will go up from $675.25 to $695.50, while a Class H vehicle licence will increase by $46 to $1,597.80.
Mr Richards also revealed that a vehicle licence exemption enjoyed by seniors will be partially removed, with owners of vehicles in bands E, F, G and H to be made liable for the annual fee. In total, Government expects to bring in $28.2 million in revenue from vehicle licensing fees in the next year and it is estimated the increases will swell Government coffers by an additional $2.2 million.
The cost of bus day passes will also increase, although Mr Richards said this will likely impact visitors rather than residents.
Increases in land tax will only apply to properties with an annual rental value of $90,000 a figure that will leave 96 percent of residential properties unaffected by the move.
Mr Richards did not reveal how much the price of a packet of cigarettes will increase by, but did confirm that duty on tobacco, beer, wine and spirits will go up in April, providing an additional $2 million in revenue each year.
Some businesses will be affected by a two percent increase in the corporate service tax, but payroll tax concessions for the hotel, restaurant and retail sectors will be extended. Companies taking on new Bermudian workers will also be exempt from payroll tax on those staff for two years.
Mr Richards revealed that “large amounts of money” were still owed to Government in unpaid taxes, and that it was important for these debts to be paid to improve cash flow.
“As Government presently has to borrow money to pay monthly bills, every unpaid dollar owed to Government increases the public debt and costs taxpayers the interest payable on that dollar,” he said.
“Due to the extended recession there are many small businesses that have struggled to meet their tax obligations in a timely fashion. Government will work with these businesses to make suitable arrangements.
“However, there are others who simply ignore their obligations. For this group, Government will use all available means to collect overdue taxes, thereby improving Government’s cash flow and reducing its need for borrowing.”