Throne Speech: tax reform, healthcare at fore
Tax reform designed to reflect people’s ability to pay is in the pipeline, it was announced in the Throne Speech yesterday.
A livable wage, cheaper healthcare, lower power costs and more competition in the mortgage market to drive down costs are also on the cards.
The first measure in tax reform will be a change to social insurance contributions to end fixed-rate contributions in favour of a system based on a percentage of income. John Rankin, the Governor, who delivered the Throne Speech on behalf of the Government, said: “This change will increase the take-home pay of low-income workers, while ensuring that our pensions fund is sustainable for the future.”
Mr Rankin added that more changes will be announced in the Budget speech in February. Mr Rankin also announced more relief on mortgage payments, designed to boost disposable income, which can be pumped into the economy, saved or invested.
The Governor said: “The Government is determined to provide relief to hard-working families through a series of measures, including but not limited to, engaging alternative financing regimes, guarantees to reduce mortgage costs and repayments and where required, legislation.”
Mr Rankin said that banks in Bermuda had used American interest rates on mortgages and in some cases raked in a 24 per cent return on equity — four times the average in the European Union. He added: “Not all local banks have increased mortgage rates and our tax system should not prevent families from taking advantage of lower rates at a competing bank.
“To boost competition between existing banks, stamp duty on mortgage refinancing will be eliminated for amounts under $750,000, allowing Bermudians to move their mortgages to a bank that may charge a lower rate without having to pay taxes on that transaction.”
Mr Rankin said that lifestyle diseases and inefficient health services delivery had combined to make the cost of healthcare on the island “unsustainable”.
But he added: “The Government will change the way we pay for healthcare and make it more affordable by expanding access to coverage at better rates.”
Mr Rankin said the high cost of health insurance is also expected to come down and “entrenched, vested interests” in the insurance industry will be taken on. He added: “The needs of Bermudians must finally take precedence over insurers’ profits.
“Therefore, upon conclusion of the necessary consultation, the Ministry of Health will advance a national health plan that will put all persons in Bermuda into either one or two health insurance pools, which will reduce the cost of health insurance.
“This fundamental reform will be the subject of legislation during this session.”
The Throne Speech added that the massive cost of electricity hit the average Bermudian, and deterred investors and developers from doing business on the island. Mr Rankin said: “During this session, legislation will be advanced that provides greater powers to the Government to reduce the costs of electricity for the people of Bermuda.
“Additionally, the Government will change the structure of energy taxes to promote energy conservation by replacing the flat rate of tax on fuel imports with a progressive tax based on energy consumption.”
The Throne Speech added it also planned to boost distributed generation by using renewable energy on a “community, commercial and utility scale”.
Mr Rankin added that a “living wage regime” would be enacted in this session of the House of Assembly.
The Throne Speech said that the latest census showed that black Bermudians had fallen behind in access to higher education and that the Government plans to boost the numbers going to tertiary education.
Mr Rankin said: “To achieve this, the current financial aid grant will be increased to ensure that even more young and mature students who have the ability, but not the means, are not hindered from attending the Bermuda College,”
He added: “Also during this session, a merit-based ‘College Promise’ programme will be introduced, which will award scholarships to the Bermuda College to public-school graduates with a grade-point average of 3.0 or higher.”
Younger people will also get a chance to get their feet on the property ladder with the construction of apartments in Hamilton for sale or rent by the Bermuda Housing Corporation.
Mr Rankin said: “This will meet the Government’s mandate of putting independent living in reach of many of Bermuda’s young people who want to own their own place and move out of their family homestead.”
Older people in the public service will be allowed to work past the age of 65, although the right to retire at that age will be preserved. Other Throne Speech promises included the transformation of two floors of the old Hamilton Police Station on Parliament Street into a centre for arbitration, with “complimentary amenities” on the other floors.
The speech added the building will be named after Ottiwell Simmons, a former Progressive Labour Party MP and president of the Bermuda Industrial Union.
Mr Rankin also promised simpler rules on Bermudian status, the status of permanent resident’s certificate holders and status for mixed-status families,
The Government also announced that work-permit procedures will be changed to allow companies with a track record of hiring, training and promoting Bermudians access to “a more streamlined process”.
Mr Rankin said: “The scrutiny needed for bad employers should not subject good corporate citizens to delays.
“Concurrently, companies that discriminate against Bermudians in hiring will be subject to additional scrutiny and graduated penalties.”
As predicted, the cultivation of cannabis for medical use and permission for licensed doctors to prescribe the drug will also be legislated.
The Government also announced a crackdown on plastic waste, single-use plastics such as straws will be banned by 2022, with a charge imposed on their use in the two-year run-up to their elimination.
A Unified Family Court and Mediation Centre will also be set up to streamline the legal process, with a single registry and promotion of the use of mediation to solve disputes.
Mr Rankin said: “The people of Bermuda must be relieved of the systemic burdens, which are now more than unbearable.
“These burdens serve to counteract any chance of economic growth for Bermuda and fuel the stresses of simply making ends meet in this society.”
He added that legislation had “carved out a mandated revenue base for a segment of this community” and the system had not changed in decades.
Mr Rankin said: “Just as legislation was the tool to create these conditions, it is legislation that must be used as a tool to create the justice and equity now demanded in 2018 and beyond.”