Departure tax increase approved
The House of Assembly has voted to increase departure tax, despite concerns by the Opposition that it will hinder growth in the tourism sector.
The Miscellaneous Taxes Amendment Act 2015, presented by Finance Minister Bob Richards, will increase departure tax at LF Wade International Airport from $35 to $50.
Noting the criticism to the proposed airport development project and the lack of tendering associated with it, he stated that more than 600 jobs will be created through the proposed airport redevelopment project, 400 of which will be long-term jobs.
“While some people may say we are not going the normal way, we have gone the extra mile to protect the public purse and Bermuda in general against the risks associated with that project,” Mr Richards said. “The risk of overruns, the risk of lateness, the risk of jobs not materialising. All of these risks are being either eliminated or mitigated.”
While the One Bermuda Alliance said the tax increase would help fund the 2017 America's Cup, Opposition Leader Marc Bean argued that the act was sweetening the pot for the proposed redevelopment of the terminal building. Mr Bean said the tax increase goes directly against the push to rebuild the tourism sector.
“If tourism is the new focus and hotel development is the new stimulus, how on Earth do you tax the blood stream of both strategies?” he said. “We know it's not to reduce the deficit, it's to fatten the calf for CCC.
“In one instance this evening, we tax property in a depressed property market. Then we tax labour in a depressed market with increasing unemployment. Then we go ahead and tax the goose that lays the silver eggs. Tourism. Not gold, but silver, but we tax it.”
Tourism and Transport Minister Shawn Crockwell said that when the increase was first broached, he said the increase would not make costs prohibitive and that total airport fees would remain in a competitive range.
With the increase, total airport fees in Bermuda will be $58.31, compared with $63 in the US, $70 in the Turks and Caicos and $82.91 in Jamaica. “This is not ideal, but I understand it and it's not going to impede progress going forward,” he said.
Shadow Tourism Minister Zane DeSilva, however, said that the comparison with other jurisdictions was misleading as it did not account for the high cost of tickets to Bermuda and Shadow Transport Minister Lawrence Scott said that the tax hike will result in a higher cost of business for airlines.
“Maybe it's not the right time to raise departure tax when you have days that only two airlines will fly to the Island. Actually, some days it's only one airline with two flights to the Island. This is not the time to raise departure tax.”
Several PLP members re-raised concerns about the airport project, particularly the lack of tendering for the capital project.
Shadow Finance Minister David Burt said that a new airport will not draw in new tourists, saying the money would better be spent investing in tourism and marketing.
“What we need is to increase our air arrivals, and increasing departure tax and increasing the cost to come to Bermuda is not something that is going to increase air arrivals,” he said.
He also questioned where 400 long-term jobs could come from at the airport project, saying the airport now employs 43 staff.