The National Budget for 2017/18 moves Bermuda closer to our goal of having a balanced budget, whereby no money will be required to be borrowed to finance the needs of Government.
Projections for 2018/19 indicate that the Current Account surplus will cover interest charges and capital expenditures, meaning that for the first time in 15 years, Government will not be adding new net debt, and will start reducing it.
But for the first time in Bermuda’s history this coming year, our debt service will be the highest line item of expenditure. Servicing the national debt will be more expensive this year than the budget for any single Ministry.
All told, for fiscal 2017/18 there will be a projected deficit of $135 million – that’s $135 million more in expenditure, than anticipated revenue, requiring $135 million in new borrowing.
But this deficit is $64.4 million less than the 2016/17 deficit, which was nearly $200 million. We have been making annual progress in whittling the deficit down.
This Budget puts our net public debt at $2.398 billion, with a projected debt service cost of $186 million, claiming nearly 18 cents of every dollar the government collects in revenue.
This Government Budget is one part of a multi-year plan to completely eliminate the annual deficit – the most important part of our financial plan to ensure the long-term prosperity for the Bermudian people.
To take that step, the Government is moving to both broaden the tax base, and, establish tax cuts to ease cost-of-living pressures on lower income earners.
Payroll tax reform will introduce the principle of fairness into our system of taxation – a system that has always been unfair to lower income employees. These progressive reforms will require more from those who earn more, and less from those who earn less.
I want to outline some of the highlights from the 2017/2018 Budget.
A new Financial Services Taxes on banks, local insurance companies and Money Service Businesses are expected to generate about $11.4 million per year.
Annual Government fees for ‘investment/holding/trading’ Permit Companies will rise from $1,995 to $25,000.
We expect the sale of surplus Government property to raise an estimated $3 million this year.
There will be:
- Tax relief for those earning $96,000 or less.
- More required from those earning more.
- Increased funding for Education
- Money for needed road works.
- A hold on any changes to land tax rates.
- An end to tax concessions for hotels, retailers and restaurants.
- And, additional customs duties, including those on fuel and the “sin” taxes.