Tax on rent income may be on cards for 2022
“Fundamental changes” to Bermuda’s taxation regime could come with some form of tax on rental income in the 2022-23 Budget, the Premier has revealed.
David Burt said the Tax Reform Commission, set up in 2017, continues to examine an overhaul of taxation that he was “relatively” sure would emerge after the coming Budget cycle
Mr Burt was speaking last Friday as he discussed his administration’s progress in the first 100 days since the Progressive Labour Party regained power with 30 of the 36 seats in the House of Assembly.
The Premier said the generation of wealth in Bermuda was “inextricably tied” to an “unfair system of taxation”.
He added: “It makes no sense that individuals who may own 30 or 40 properties, who are collecting massive amounts of income, are not paying any taxes on the amount they earn, but the person who has one, two or three jobs, because that’s the only way they can earn income, is paying taxes on that labour income.”
He added: “Our system of taxation in this country taxes labour, but does not in any way, shape or form look at other forms of income and that is fundamentally unfair.”
Mr Burt said the commission would bring “fundamental changes” expected to be included in next year’s Budget.
He added the tax overhaul, promised in the PLP’s election manifesto was “critical”.
Mr Burt said it made “no sense” for the owner of a business, who might take home ten times the pay of his staff, to pay the same in social insurance.
He added the changes had been outlined by the Fiscal Responsibility Panel, set up in 2015 under the One Bermuda Alliance government.
He added that international business, labour and the political community had made it clear that “we have to come to a consensus”.
“I am relatively certain that by the next Budget cycle we will have a consensus on the way forward on these issues.”
The Premier also highlighted the problem of the island’s entrenched inequality as the PLP tried to build the economy.
He said: “The most important thing is to recognise, if the country has to grow economically, the economic growth cannot only benefit those persons who have always benefited in the economy.”
Mr Burt highlighted the infrastructure construction projects unveiled last year by the Ministry of Public Works as a stimulus package for an economy battered by the Covid-19 pandemic.
He said small businesses were being targeted for the contracts.
He added: “If you look at the changes that have happened with the procurement policy, to make sure that more small businesses can get government contracts, to make sure more women-owned business, black-owned businesses, persons who have disabilities to have access to these things, that is the way you make sure that you build a more fair and equitable society.”
This story has been corrected from the original version to correct the statement that rental tax would definitely be in the 2022-23 Budget. Mr Burt only used rental income as an example of the unfairness of the current system and stated that he was confident changes to the current system would be in the 2022-23 Budget.