Live: Budget 2017-18
Finance minister Bob Richards is delivering the One Bermuda Alliance's Budget for the fiscal year 2017-18 at the House of Assembly today.
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12.01pm Mr Richards is wrapping up now and in conclusion says: “We will remain vigilant to the dangers and the opportunities — carried forward, as they always are, by the fates, and keep Bermuda moving forward no matter what the wind.”
12.00pm The Finance Minister says that the increases have been partially offset by reductions in other expenditures “with the most notable being a one-off $25 million reduction in the Government's annual funding to the BHB”. He adds: “Considering the relatively strong liquidity position of the BHB it is anticipated that the BHB can withstand the one year reduction in funding.” He goes on to outline that $3.2 million will go towards school maintenance and $3.5 million for road works.
11.59am Mr Richards specifies budget increases in tourism, national security and education saying: “We have limited increases to priority areas which include increased funding to the Ministry of Education for enhancements to the Public Education System, additional funding for the Ministry of National Security and supplementary funding to the Bermuda Tourism Authority.”
11.57am The yield of payroll tax following the reform and full rollback for payroll tax concessions is estimated at $439 million, according to Mr Richards. He says that the duty on fuel will be raised five cents per litre in April 2017 to achieve additional customs revenue of about $5 million. The duty on cigarettes and alcohol will be raised in April 2017 to achieve additional customs revenue of about $5.3 million.
11.55am Mr Richards is now talking specifically about the 2017/2018 budget. He says: “The estimates for 2017/18 indicate Government revenues of $1.042 billion, which is $45 million or 4.6 per cent higher than the original estimate from the previous year.”
11.50am The Finance Minister has begun to outline the forecast financial results for the current fiscal year. ‘The forecast deficit for the financial year ending March 31, 2017, of $212.2 million is $7.9 million less than the original 2015/16 deficit estimate,” he says. Moving on to public debt he says: “Government will have to incur new borrowing of $135 million to finance the 2017/18 deficit and as of March 31, 2018, it is estimated that gross public debt will stand at $2.629 billion, and debt, net of the sinking fund, will be $2.481 billion.”
11.45am Mr Richards says that it is not envisioned that the General Services Tax will be implemented before April 1, 2018, while the Financial Services Tax will be introduced in April 2017. Turning to company fees the finance minister says that incorporation fees have not been increased, while land taxes for the upcoming year will also remain unchanged.
11.40am Moving on to customs duties Mr Richards outlines that increases in duty rates will increase customs duty by approximately $19.5 million. He adds: “Imposed excise duties will also be increased to continue the process of increasing the revenue yield from indirect taxes. These increases in specific excise duties on alcohol, tobacco and petrol will increase revenue by approximately $10.3 million.”
11.36am Mr Richards says: “In fiscal year 2014/15 non legislated concession to hotels, retailers and restaurants totalled approximately $31 million. The roll back of these concessions was started in 2015/16 and in this fiscal year Government will fully withdraw such concessions.”
11.35am Mr Richards announces that the salary cap will be raised from $750,000 per annum to $900,000 per annum. He adds: “After considerable consultation Government decided not to split the payroll tax into two separate taxes as our objectives could be achieved under the current structure.”
11.30am Mr Richards outlines new tax rates for employees for each band. These new bands will mean people earning $48,000 or less will see the tax rate fall from 6 per cent to 4.25 per cent by 2018-19 and those paid between $48,000 and $96,000 will see their tax rate cut from 6 per cent to 5.5 per cent. Those earning between $96,000 and $235,000 can expect to see their payroll tax rate jump by a half, from 6 per cent to 9 per cent by 2018-19. The biggest earners — those who take home between $235,000 and $900,000 — can expect a five percentage point rise from 6 per cent to 11 per cent over two years. Mr Richards says: “Government is seeking to give tax relief mainly to the two lowest band of wage ranges.”
11.25am The Finance Minister has moved onto the issue of payroll tax saying the current structure has “always been unfair to lower income employees”. He says the OBA has “seized the nettle” to make the system to fair. He adds: “To numerically model the effect of changes in tax rates on employees we have used bands of income levels from the Department of Statistics data.”
11.20am Mr Richards has moved on to the topic of national debt. He says: “The top priority is debt service, estimated to cost $186 million in the next fiscal year, now the largest line item in the Government's budget.” He stresses the importance of not adding to the debt before adding: “we are making good progress.”
11.11am Referring to pensions and seniors Mr Richards says: “We are in consultation with the Pensions Commission to make the system more responsive to the needs of users but at the same time ensuring that the assets are sufficiently protected so that they are there when members actually retire”.
11.10am The Finance Minister moves on the banking sector saying that lending is now “in excess of $1 billion less than it was in 2008”. He says the “one bright shaft of light through the gloom” was the successful Initial Public Offering by Butterfield Bank in 2016.
11.05am “The latest jobs figures from the Department of Statistics show that, as of last August, year over year, there were 56 more jobs reported than the previous year,” says Mr Richards as he begins to talk about employment.
11.00am Mr Richards touches on the progress made in the construction and property markets.
10.55am Moving on to international business and the Bermuda Business Development Agency Mr Richards says: “The BDA helped 17 companies establish themselves on the island in 2016, with research indicating the creation of at least 146 jobs through companies that had received BDA assistance”.
10.52am Mr Richards says 2017 will be the start of a renaissance for the East End with the airport redevelopment project, a new hotel, a dedicated cruise ship returning to the town and a new marina in the works.
10.50am The Finance Minister has moved on to talk about the “unprecedented” impact of the America's Cup. He says AC35 is already a triumph branding it “an example of Government's economic strategy coming to life”. He tells MPs that collectively the teams have spent over $22 million on their team bases alone. He says the event will be a “boon for Bermudian entrepreneurs” and provide jobs and opportunity for the short term and the long term.
10.45am Mr Richards has moved on to local issues now and is highlighting improved retail sale trends and the “impressive” turnaround of the tourism industry by the Bermuda Tourism Authority. He points to new infrastructure projects including the Caroline Bay resort, the Loren, Surf Side and the “soon-to-break-ground St Regis in St George's” as proof of the progress.
10.40am Mr Richards warns: “The threat level to our international business model has never been as high or as imminent as it is now.” He describes the situation as a “clear and present danger” and vows that the Government will “remain vigilant and prepared to defend against these threats”.
10.35am Moving on to what he describes as the “tax haven threat” Mr Richards says Government will fight “with all the means at our disposal” proposals by British MPs to amend the Criminal Finances Bill that would enable the British Parliament to use an Order in Council to compel overseas territories to adopt the UK model of public beneficial ownership registers for companies incorporated in the territories.
10.30am Mr Richards vows that Government will do everything possible to minimise the negative fallout of Brexit on Bermuda's travel privileges.
10.25am Before moving on to talk about the potential impacts of Brexit Mr Richards says: “The risks to our international business model are very significant and we must be extra alert and vigilant.”
10.20am The Finance Minister has begun talking about “economic conditions and outlook”. Highlighting external threats he talks about the “Trump effect” saying: “If taxes were placed on cash flows from reinsurance claims it could be catastrophic for Bermuda-based reinsurance companies.”
10.15am Mr Richards says that tax cuts in his budget statement will ease cost of living pressures for the thousands of people who could “use a break”. He adds: “The cuts, which are based on the income bands a person's wages fall within, will see people who earn $96,000 or less a year getting tax cuts up to $720.”
10.10am The Finance Minister tells the House “we have made substantial progress” highlighting two years of GDP growth, tourism rejuvenation, hotel developments and job growth. He adds: “For the first time in 15 years the Government will not be adding to its net debt.”
10am Mr Richards has begun his speech saying: “We have entered an age of uncertainly in which the landscape of our life is shifting uncomfortably towards destination not known”. He says the Government has an important “safe hands” role.