MPs pass payroll tax changes
More than 80 per cent of people in work will see a reduction in their payroll tax bills from next month, MPs heard last night.
The move will come into effect after MPs passed the Payroll Tax Amendment Act 2023 in the House of Assembly.
Giving the Bill its second reading, David Burt said that anyone earning less than $132,000 — 86 per cent of the workforce — will be better off under the legislation, which reduces rates of tax in lower-income bands.
Under the change, anyone earning up to $48,000 will pay 0.5 per cent in payroll tax, down from 1.5 per cent, while those earning between $48,000 and $96,000 will pay 9.25 per cent, up from 9 per cent.
However, because they will be taxed at 0.5 per cent on the first $48,000 of their income, their monthly bill will be reduced.
Those earning between $96,000 and $200,000 will pay 10 per cent while high earners on a salary up to $500,000 will pay 11.5 per cent.
The law also creates a fifth band for employees earning in excess of $500,000. They will now pay 12.5 per cent in payroll tax.
In other changes, self-employed farmers and fishermen will see their payroll tax axed from 1.75 per cent to zero.
Hotels and restaurants with an annual payroll of $350,000 or more will pay 17 per cent less in tax.
Education, sport and scientific institutions will see their payroll tax rate move from 1.75 per cent to 1 per cent.
Mr Burt, the Premier and Minister of Finance, said the law showed that the Progressive Labour Party was the party of low taxation — which, he claimed, had risen to record levels under the One Bermuda Alliance Government.
He said that the changes were “progressive” and made the tax system more fair — and that he was proud of his party’s record in “supporting the workers of this country” in the face of unprecedented global inflation.
Mr Burt also claimed that the change represented a boon for small business, which will have to pay less in payroll tax.
He said: “This Government is focused on economic growth and so there must be a concerted effort to support local entrepreneurs.”
Cole Simons, the Leader of the Opposition, said the OBA supported the amendments.
But he added that increased payroll tax deductions for those earning slightly more than $132,000 could be damaging.
He said: “We recognise the economic challenges we all face and that quality of life has diminished in past two or three years. We know that people are not living their best lives and that is why we’re seeing an exodus of young people and retirees — because they can no longer afford to stay here.
“We’re seeing our middle class diminish daily. Two years into new careers, these young Bermudians are making $130,000. They are at early stages of their careers and are negatively impacted — they’ll be paying an additional 1 per cent.
“These young Bermudians are feeling the pinch as it is and need all the help they can get. Be careful what you do because you do not want to erode our middle class and discourage young Bermudians.”
The OBA MP Craig Cannonier also backed the changes, but suggested that the Government had had no choice but to provide relief for low earners.
He said: “We’re in this position because of the times were living in. We are having trying times and that’s the reason the Government is having to do this. If it was about equity, it would have been done 20 years ago.”
Mr Burt hit back, saying that if there were reductions in some salary bands, there had to be increases in others to compensate.
Arguing that the two parties had different philosophies on taxation, he accused the OBA of wanting to have it “both ways”.
Mr Burt was supported by the backbencher Anthony Richardson, who accused opposition MPs of sitting on the fence.
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