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Changes to controversial sugar tax outlined by Premier in Budget

Sugar (File photograph)

The Government is set to modify its controversial sugar tax to reduce duty on low-sugar products.

While the tax was intended to encourage residents to choose healthy food options, the measures have come under fire as the island faced inflation and increased food prices.

David Burt said in the Budget speech yesterday: “Bermuda has one of the highest rates of non-communicable diseases in the world, and it is incumbent upon governments to act to reduce these pressures over the long term.

“However, the application of the sugar tax via the customs tariff has led to many items which may contain minimal added sugar being subject to the sugar tax.”

He said that changes will be made to the Customs Tariff Act to reduce items that have a “small amount of additional sugar” such as nutritional bars, low-sugar drinks and non-dairy creamers.

The promised change is part of several duty cuts aimed at addressing the cost of living and bolstering the island’s economy, including a duty exemption for school uniforms to ease pressure on parents.

The Premier also said the Government will eliminate duty on imported aggregate used to manufacture concrete in an effort to reduce construction costs.

“Typically, aggregate is not imported into Bermuda, but as the need is increasing, it is important that we act to minimise the increase to construction costs,” Mr Burt said.

“Therefore, the Government will eliminate customs duty on aggregate imports used to manufacture concrete and concrete blocks.”

Last month The Royal Gazetterevealed that the prices charged by the island’s major suppliers of concrete and block had increased sharply.

Mr Burt added that the Government would expand duty relief for capital upgrades in place for restaurants to the personal care and personal fitness sectors.

“Spas, beauty salons and fitness centres serve locals and visitors alike, and we must support them to provide new and updated equipment for the enjoyment of their customers without the burden of additional customs duty when they seek to upgrade their facilities,” he said.

“Customs duty charges for upgrades to equipment represent a disincentive to business owners to invest. Business investment is key to economic growth, and this change will make it easier for our local businesses to invest for the future.”

The Budget also included a series of fee increases in an effort to reach the Government’s revenue targets.

Land tax for the top two bands — approximately 4 per cent of the island’s highest-valued properties — will go up, raising an estimated $2.4 million for the Government.

Mr Burt said: “During consultation with various groups, it was pointed out that Bermuda’s land taxes for high-value properties are comparatively low when compared to other jurisdictions.

“To provide additional revenue to the treasury while not increasing the burden on the vast majority of homeowners, the Government will increase the top two bands of land tax by 5 per cent each.”

The Government is also set to increase stamp duty, trademark fees, fines, solid waste dumping fees, planning fees, seaborne shipping fees and immigration fees — except for passport fees — by 5 per cent.

Those increases are estimated to raise a total of $3.3 million over the course of the financial year.

Owners of holiday rental properties will be faced with a new holiday rental registration fee, which Mr Burt said would be determined based on the annual rental value of the property.

“In the many jurisdictions globally where vacation rentals have reduced the amount of affordable housing, governments must act to ensure that vacation rentals do not exacerbate housing shortages,” he said.

“Though the Government is not proposing a limit on vacation rentals at this time, there will be a fee introduced to register properties as vacation rentals.”

The Government will also launch a “nominal” fee for Public Access to Information requests — although the fee would not be applied to private individuals who seek information about the data the Government holds on them.

“A government authority spent in excess of $300,000 to respond to a single Pati request,” Mr Burt said. “These are funds that could have been used to advance the wellbeing of Bermuda but were instead spent researching information.

“High levels of expenditure on requests are not uncommon, as many government departments have had to halt vital work or hire short-term consultants to assist in responding to Pati requests.”

He added that the fee would “not nearly cover” the full government costs for handling the requests.

Mr Burt also said the Registrar of Companies would introduce a new corporate regulatory fee — set at $150 per year for local companies and $500 per year for other entities — and introduce an increased set of fees for matters in the island’s courts.

• The full Budget statement can be seen under related media

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Published February 18, 2023 at 7:56 am (Updated February 18, 2023 at 10:36 am)

Changes to controversial sugar tax outlined by Premier in Budget

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