Bermuda's Latest Budget Further Delays Fiscal Action
by Mike Godfrey, Lowtax.net, Washington
12 March, 2014
Bermuda's 2014 Budget introduces no new sources of tax revenue despite concerns that the territory's deficit is swelling after several years of unconstrained budget deficits. The Government hopes higher customs duty receipts will cut the size of Bermuda's deficit next year, after it deemed the local economy to be too fragile to withstand higher taxes.
Revenue receipts remain significantly below 2010/11 levels, particularly payroll taxes. Payroll tax revenue rose nominally in the 2012/13 tax year, however, from BMD328m (USD328m), to BMD329m, after declining in the last few years, and customs duties increased by 16 percent, up BMD28m, in 2012/13, compared with 2011/12 levels.
The Budget estimates that revenue for 2014/15 will be BMD901.7m. This would be BMD29.8m, or 3.4 percent, higher than in 2013/14. The lion's share of this amount will come from customs duties, which the Government hopes will rise by BMD25.7m, or 14.7 percent, year-on-year. The only increase to the burden on local businesses will be a hike of five percent to most Government fees, bringing in an additional BMD2-3m. "Other than the fee adjustments there are no new taxes contained in the Budget for the ensuing fiscal year," the Government confirmed.
Bermuda's Minister for Finance, Everard Richards, said: "Despite signs of recovery, the Bermuda economy remains fragile. An increase in tax rates would hurt recovery and impose new pressures on individuals and families struggling to make ends meet. Subsidies currently in place for the hospitality, restaurant and retail sectors – so-called concessions – will remain in place for the next fiscal year. The tax initiatives started last fiscal year will also continue into next fiscal year. We are being conservative with our revenue estimates, projecting them to grow marginally next year."
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