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Payroll tax relief could be extended

Temporary payroll tax relief could be extended.

The temporary payroll tax relief granted to retailers on Friday may be given to other businesses too.Premier Paula Cox revealed last night she had ordered a review of business classifications to determine if certain “customer-orientated” firms should also benefit from having payroll tax lifted.And she appeared to say in a statement that she may consider extending the relief beyond an initial six-month period, though the Ministry of Finance did not clarify what she meant by press time.Ms Cox also advised yesterday that changes to customs duty at the airport would come into effect on November 4.On that date, the amount of duty for declared goods coming into the country will rise from 25 percent to 35 percent and the $100 duty-free travel allowance will be restricted to one per household, rather than one per person. The Premier announced all the measures at a press conference on Friday, when she said she was seeking to help struggling local retailers.In her statement last night, she said: “Over the last two decades, consumer-oriented businesses have extended the mix of goods and services that they sell to people.“Changes over the years mean that old models and definitions of what should be classified as ‘retail’ today are less relevant and some further changes are required. For example, barber shops and beauty salons now sell hair products and related items to their clients.“Are they to be classified as operating in the ‘household and personal services sector’ where historically they have been classified for economic purposes? Or are barber shops and salons also ‘retail’ outlets?“Similarly, are gas stations that sell food, drinks and other consumer items to be classified in the retail sector or are they in the transport sector?”Ms Cox said in a modern economy like Bermuda’s there were “many more grey lines between business sectors than there used to be”.She added: “This is a reason to take a fresh look at how economic policy initiatives should apply to different sectors of business activity during difficult economic conditions where financial relief is the policy goal.“Categories of business activity used to depend upon fairly distinct divisions of economic activity. These divisions of economic activity are no longer as clear and distinct as they once were. As Minister of Finance, I have requested a fresh review of business classifications for this policy initiative for retail businesses.”The Premier, in an apparent reference to how long the concession may last, added: “I have asked also for estimates of cost so that I may consider the possible extension of the temporary payroll tax relief.” She said once the review was complete, a list of any further categories able to benefit from the payroll tax concession would be available from the Office of the Tax Commissioner.The Premier said Government had already rolled back payroll tax in this year’s Budget, to an estimated full-year cost of $50 million to the public treasury. “The focus therefore will continue to be on assisting the most vulnerable sectors, with ultimate limits set by affordability,” she said. “We always have to consider what is affordable for the country as part of our debt management strategy.“It is never possible to please all stakeholders when tough choices must be made. However, in order that we do go forward with a benefit for the majority, this Government will make the tough choices for the benefit of all of Bermuda’s people.”United Bermuda Party leader Kim Swan welcomed Ms Cox’s announcement.He said: “Whilst I will review this policy change more thoroughly with my colleagues, at first blush it is pleasing that the Premier, in her role as Finance Minister, is directing the Government’s concerns to the plight of struggling retail businesses.”He suggested “trade-orientated” businesses, such as plumbers, masons and carpenters, were also suffering and could benefit from some help. “They have the scope to employ great numbers of people if they have the jobs,” he said. “We encourage the Government to look at the Planning Department to see if there is a backlog of planning applications that could help the private sector in trades get working this fall.“If so, this much needed work will help private sector businesses survive the ‘shoulder months’ and keep our people working. The knock-on effect will be beneficial to Bermuda’s economy. The success of private sector businesses will help Bermuda move faster towards economic recovery.”Shadow Finance Minister Bob Richards claimed on Friday that Ms Cox may not have the legal authority to change the airport duty rates without MPs’ approval in Parliament.The Ministry of Finance did not respond to a question on that point yesterday. Mr Richards said it appeared the Premier had delayed the airport duty increase until November 4 because of the need to inform the House of Assembly of the change.“It either requires a bill or a report to the House,” he said. “The House resumes on November 4 and I reckon that the Throne Speech is enough to be considered a report to the House.”

Premier Paula Cox