Burt plans to use CIT to slash island’s debt
The island’s $3.2 billion debt, which comes with punishing interest payments, is forecast to fall to below $2.5 billion by the 2027-28 fiscal year, the Premier announced this morning as he called for public feedback to help tailor the Government’s fiscal blueprint for the year ahead.
Unveiling the Pre-Budget Reportin advance of the 2026-27 fiscal year, David Burt said: “That means less of your tax dollars going towards interest payments, and more being invested in things that matter — like healthcare and infrastructure.”
The Premier, who is also the Minister of Finance, also announced three tax reduction recommendations from the Tax Reform Commission for “partial or complete implementation” in 2026-27 while the Government’s non-corporate income tax take would be essentially frozen through 2028.
If approved, the Tax Reform Commission’s recommendation would cut the employer portion of payroll tax, capping higher rate bands at 7 per cent for all taxpayers.
The commission called for eliminating the remaining duty on the Government’s books on the production, supply and delivery of electricity — along with the removal of the employer portion of payroll tax for “entities engaged in regulated bulk power generation and distribution using fossil fuels”.
The TRC further recommended cutting the employee portion of payroll tax for workers earning less than $96,000 annually, with an increase on workers making more than that amount.
The Pre-Budget Report will also look at relieving health insurance costs for the underinsured and the elderly in line with TRC recommendations.
The report does not envisage “any major tax or fee increases”, however.
Mr Burt also said the Government would adhere to two new fiscal rules going forward.
He said: “First, a deficit rule. The current budget should remain in balance or surplus, excluding CIT revenue, capital spending, interest payments and structural transformational investment, known as healthcare, because we must reform our healthcare system.
“Secondly, the debt over assets rule. Over a rolling period of at three years, at least 70 per cent of net corporate income tax revenues should be devoted to paying debt interest, reducing net debt or accumulating net financial assets.”
Mr Burt said the approach was in line with international best practice and in keeping with the Government’s “consistent approach to tax reform — which the Fiscal Responsibility Panel commented was swift, strategic and executed with an impressive level of competence.”
The report was informed by pre-consultation with business groups, but the Premier emphasised that some ideas shared by the community had, in some years, made it through to the final Budget.
He called for feedback ahead of the official Budget reading set to proceed before legislators on February 20, 2026, and urged the public to comment on the report’s proposals online via forum.gov.bm or by e-mailing openbudget@gov.bm before January 16, 2026.
While announcing the latest Pre-Budget Report, the Premier also took the opportunity to address broader issues over the island’s economic prognosis.
David Burt responded to a warning issued last month by Marico Thomas, the head of the Chamber of Commerce, who commended low unemployment but stated that the coming reopening of the Fairmont Southampton Hotel could seriously erode the island’s limited workforce.
Mr Burt acknowledged the island was dealing with “a very tight labour market” and that Bermuda, “like any other country, is dealing with various demographic changes”.
He cited a scenario of 1,000 Bermudian workers hitting retirement age, with a mere 500 to replace them, adding: “That’s just reality.”
He added: “We have a very strong Minister of Economy and Labour who knows, understands and gets this.” Mr Burt said the island needed to ensure it maintained an adequate labour supply — but not “to the detriment of Bermudians”.
Mr Burt also took questions on an impending rise in health insurance premiums, after a significant salary rise with retroactive pay negotiated with unionised hospital staff. Payments are due in January and at the end of April 2026.
It was announced this week that the move would have a knock-on effect on the standard premium rate, a mandatory component of health insurance plans.
The Premier said the Government would cushion some of the blow, but that the rate would inevitably rise. Exactly by how much was “going to be a discussion that will take place in Cabinet”.
Mr Burt pointed out that the Government had used funds from the island’s improved economic performance to shield residents from premium increases for the past several years.
He added: “But it’s important to recognise that as we look to reform healthcare, the Government cannot continue to underwrite that free. There is going to have to be an increase in the standard premium rate.”
Mr Burt conceded the Government differed with the Fiscal Responsibility Panel on CIT revenues, which he said the group felt “should be just kept separate” — something he said “does not accord with the policy view of the Government”.
He said the Government intended to use some CIT revenue to reduce taxes that raised the cost of living, rather than segregating the revenues entirely for bringing down debt.
However, the Premier closed his remarks with a hint of deeper potential changes that had been endorsed by the panel.
He noted that the Fiscal Responsibility Panel had “always” stated that tax reform had to be “along the lines of looking at a change in the system of taxation towards a broader based income tax”.
“Those words would never be uttered by a politician in Bermuda before,” he said.
“But now they’re coming from the bipartisan Tax Reform Commission, they’re coming from the Fiscal Responsibility Panel.”
Mr Burt said that if the island was serious about “long-term fairness”, then “that’s the direction of travel”.
• To read the Premier’s remarks and the report in full, see Related Media
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