'Wholesale' review of Bermuda’s tax system to take place
A “wholesale review”of Bermuda’s tax system will be completed by the end of the year after legislation was passed in the Senate yesterday.
The Tax Reform Commission Amendment Act 2020 – which will enable the Minister of Finance to set up the commission – received unanimous support in the Upper House.
Arianna Hodgson, the Junior Minister for Finance, said that the new commission would be created “early this year” and have six months to complete a review of taxation and revenue collection before it made recommendations to the Government.
Ms Hodgson added: “In the Government’s 2020 Speech from the Throne, it was announced that Government would lay the foundation for the necessary change to our system of taxation that forces economic inequality while stifling much needed economic growth.”
She said that a commission was established in 2017, but was disbanded after it tabled its recommendations at the end of 2018.
Ms Hodgson added: “The inequity laid bare by the pandemic’s impact cannot be an accepted feature of the economy.
“Therefore the tax Reform Commission will be invited to update its recommendations made in 2018 in light of the new economic realities created by the pandemic.”
Ms Hodgson said that the Minister of Finance would pick members of the new commission once the bill was signed by the Governor.
She added: “As this government begins its second term of office, the proposed re- establishment of the Tax Reform Commission to provide recommendations to reform our tax system represents another step in our efforts to rebuild Bermuda with Bermudians at heart. This was a promise in our election platform.”
Marcus Jones, the Senate Opposition leader said that, it was vital that the Government found ways to increase revenue because of the economic problems of the country.
He added: “In a crisis period that we’re living in right now, where Government coffers are at an all-time low, we understand the challenge that the Government has.
“On the one hand, it cannot overburden its citizenry at a time when folks are losing jobs and businesses are stretched.
“At the same time, it recognises that revenues have decreased significantly.”
Senator Jones highlighted that many of the recommendations made by the commission in 2018 were never taken up – and appealed for the Government not to repeat the mistake.
He said “There were a number of different recommendations that were made from three years ago, and if you look at the full body of that 72-page report, very little of the recommendations that were submitted were actually implemented or acted on.
“We surely do encourage the Government, when they are putting this new commission together, that this will not just be an exercise in futility, trying to satisfy all the community that work is being done.”
Mr Jones also questioned why it was necessary to set up a commission now, when Government has already pledged that there will be no new taxes until the 2022 Budget.
He said: “This pandemic has changed the economic landscape on a week-to-week, month-to-month basis.
Mr Jones asked: “Is it a good decision, or sound judgment, to set up a commission now when their services will be far more relevant and important eight to ten months from now?”
Michelle Simmons, an independent senator, said she shared the Opposition’s concerns.
But she added: “I don’t think any of us believe that tax reform is something that will happen very swiftly.
“But the Government is on the right path in terms of trying to ensure that Bermuda has a system of tax and revenue collection that is fair.
“They want an equitable, effective, efficient, competitive, and transparent system.”
David Burt, the Premier, said last week that the island had “an unfair system of taxation”.
He told The Royal Gazette: “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.
“I am relatively certain that by the next Budget cycle, we will have a consensus on the way forward on these issues.”