By Ivan Clifford
HAMILTON, Bermuda, CMC – Premier Paul Cox has presented a US$1.08 billion budget to Parliament that has been described as a “bridge to nowhere” by the main opposition One Bermuda Alliance (OBA).
Cox in presenting the fiscal package to Parliament late Friday said the measures rejected harsh austerity measures in favour of economic growth.
The budget foresees an overall deficit of US$172 million to be financed In part by the issue of a local bond, which Cox described as a “win-win” for Bermuda because it would stimulate local economic activity.
The budget extends the payroll tax concessions for hospitality and retail, at a cost of US$21 million, and aims to further stimulate the economy by allowing the private sector to freeze pension schemes for a year.
The statutory debt ceiling, which was raised to US$1.25 billion in April 2010, will be increased by another US$200 million, to US$1.45 billion. The island’s debt now stands at US$1.2 billion, the premier said.
The package involves a year-long suspension of government payments into the civil servants’ pension fund, harmonising duty rates at 25 per cent for personal imports, and extending tax concessions for certain businesses.
Government fees are to be increased by three per cent for an expected four to five million dollars in additional revenue.
Tax on cigarettes is to be increased but residents will be spared any increases in bus and ferry fares, while returning residents from overseas trips will have their duty-free allowance doubled to US$200.
But, for some senior citizens, a land tax exemption will end as government seeks to claw back an estimated four million dollars.
Property owners aged 65 and older will have to pay land tax if their homes are worth more than one million (US) dollars.
Seniors who own category A, B, C and D cars will continue to get free annual licences but owners of class E cars and above will have to pay for the licence fee, where previously they were exempt after former premier and transport minister Ewart Brown gave all seniors free licences in 2007.
A senior with an E class car will now have to pay close to US$1,000 for the licence. Owners of highest category H cars will have to pay more than US$1,500.
The OBA said the financial plan outlined by the government will not put Bermuda back on the path to economic recovery or generate significant amount of jobs and it puts “political needs before the needs of the country.
“Only through growth can we create new streams of income to support families, broaden opportunity, sustain local businesses and start moving the island back from the edge of a debt problem that threatens to cripple the future,” Shadow Finance Minister Bob Richards said in a statement.
“The budget, in short, needed to present a plan to get the island on the road to recovery. It did not. Instead, it adds tens of millions of dollars to our debt burden. It raids worker pensions and debt-clearance funds to cover shortfalls.
“For the fifth year in a row, it spends more than it earns, continuing Us on a path that takes us closer to meltdown,” Richards said, adding “this is a budget that avoids the hard decisions. This is a budget that puts the political needs of the government before the needs of the country”.
CMC/ic/pr/2012