‘We are trying to provide some relief’
The Budget was designed to find ways to put more money in the pockets of Bermudians, the finance minister said yesterday.
Curtis Dickinson told The Royal Gazette that a proposed cut to the payroll tax rate on income up to $48,000 and no new taxes were included in the Budget to give the man and woman in the street a break.
Mr Dickinson, speaking after he presented the Budget, added: “We are trying to provide some relief to people, we are also trying to figure out ways to get the economy moving.
“One way of doing that is having more money in your pocket to spend.”
Selective tax cuts were also proposed, aimed at reducing payroll taxes for those earning $96,000 or less, with the tax relief partly offset by “modest increases” in the employee portion of payroll tax for those earning more than $96,000.
The payroll tax rate applied to income up to $48,000 is to be halved from 4 per cent to 2 per cent.
There were proposed rises in the three higher payroll tax bands, with the largest a 2 per cent increase for people who earn between $48,001 to $96,000.
Mr Dickinson said the net effect was that anyone who earned $96,000 or less would see a reduction in payroll tax.
A budget deficit of $14.6 million is now projected for the current financial year, which ends on March 31.
A surplus of $7.4 million had been thought possible a year ago.
For the 2020-21 financial year, a deficit of $19.8 million is projected for the 2020-21 financial year.
Mr Dickinson said a deficit had to be balanced against the need to boost the economy.
He explained: “The way I look at the whole budgeting picture is, I can't afford to overly focus on any one dimension at the exclusion of all the others. It's a multifaceted view across several different measures.
“The deficit is one thing, but what I'm trying to do with this Budget is spur some economic activity, to get the economy moving by making spending money.
“The likelihood of Government actually raising revenue through taxes actually increases, so if we can get the economy moving I'm hopeful we can actually produce a smaller deficit.”
Mr Dickinson said: “We have purposely taken the decision not to borrow to fund operating expenses. We are borrowing to fund capital investment. Long-term investment, long-term debt.
“I'm a financier by training, and the way you do these things, if you are funding a long-term asset, you do so with capital or long-term borrowing, so you have matching principal.
“It's a small amount of money, it's a deficit. Ideally, I would rather not have one, but I want the economy to grow and so I'm taking some steps that will help to promote economic growth.”
Mr Dickinson added that the Budget Statement had several themes, including provision of relief to customers, and the a prudent approach by the Government to how it spends money.