Martha Myron, Moneywise
With the 2017 election just days away, here is a summary of some of the main points of both Bermuda’s political parties’ platforms. Note: this summary is not all inclusive. You, the voter are encouraged to read the summery of the two platforms below and both the OBA and the PLP election platforms in full. Both are attached to the online version of this story at www.royalgazette.com.</b>
Significant work was done to provide the voters of Bermuda with much to think about. What each party stands for is reflected in these carefully crafted platforms. Your job is to carefully weigh each accomplishment and proposal to decide which platform will benefit you and your family for financial success.
Some of these two party platforms’ proposals for change are almost identical, while other features are very, very different.
There is, however, one thing in common that all proposed initiatives share: cost and cash outlay.
What is the bottom line here? What is not defined in theses political platforms are the estimated cost of new incentives, continuing with already implemented incentives, leaving us with little ground to estimate the end product, if you will.
We must understand how much these initiatives will cost, how those costs may affect us personally and how government and local employers will ultimately fund these programmes.
Both platforms talk about balanced budgets, incentives for businesses, increasing existing taxes, reductions in fees and flexibility in working environments (meaning increased taxes elsewhere), proposing new tax legislation and the like.
But, the big elephant in the room is almost completely ignored.
Bermuda is now spending $186 million a year in interest and Sinking Fund contributions alone! A millstone around our necks to foreign investors! This sum represents almost 20 per cent of our annual budget, that we are trying so hard to bring into balance. This sum is not going away any year soon.
Interest only, not pay down on debt principal. This is just throwaway money that could have been so usefully employed to alleviate redundancy, incentivise local workers and businesses and continue building a better Bermuda. This continuing debt situation is like a couple who have purchased a home, made their mortgage payments faithfully for 20 years, only to be informed when they went to claim back their house deed — they did not own anything. They still owe the entire principal debt, because they were paying the interest on the mortgage only (yes, this has happened).
This insidious leaking of precious cash from our coffers will not end soon; nowhere soon enough for Bermuda residents. We are weary of this debt obligation and continued austerity, but we must soldier on until we can reclaim control of our country’s destiny.
So, the party platforms propose that Bermuda must raise revenue from the same old and possibly new sources.
Proposed employee benefits
Reports indicate that Bermuda employers have stabilised since the recession. They recently had to absorb a payroll tax. They may now be facing an unemployment tax, a more flexible working environment for employees, an extended parental leave, a new living wage, an increase in the occupational pension contributions. These increases while touted as benefits — are really taxes. Someone has to pay, but how many times can we go to the well?
Suggested passive income tax
Passive income tax legislation on rental income, vacation rentals, investment dividends, interest, etc, has been mentioned in this campaign as a means of levelling the playing field. These tax structures will give the government power (in another vast tax bureaucracy) to demand access to confidential personal, corporate, partnership, trust, foundations, etc, information in order to determine who should pay and how much.
Bermudians are seriously private people who will distrust this mandate. It is an invasion of privacy, an intrusion into daily lives, a deleterious effect on middle-lower class families and inevitably, information leaks will occur. It appears that the Bermuda family who has worked very hard to acquire a home, adding one or several small rentals, or a VRBO plan to assist in paying off their mortgage will be subject to the same policy of taxation as large commercial leasing businesses.
What will ferreting around in corporations, personal, partnerships, and trust documents for beneficial ownerships do to Bermuda’s longstanding position with international taxing authorities? Bermuda has always protected and maintained the integrity of its corporate register, except for matters of international tax compliance.
As a US and international tax practitioner for many years (now retired), I have seen first hand the devastating impact of increased taxation on businesses and the ordinary working resident.
Increased taxes drive away those very people and businesses needed to grow an economy when they head to more competitive welcoming shores (and states). Those who are left, the very people who need to benefit, are indirectly punished with higher personal taxes, tougher/fewer job opportunities, while existing businesses conserve cash flow. Bermuda has seen this happen, too.
The unintended result
Costs across the spectrum will increase as those taxed respond. Bermuda is already the highest cost of living country in the world. What will this increase do to our reputation for being “open and ready for business?”
Bermuda pension funds should never be used involuntarily for venture capital infusions. There are no guarantees with these start-up ventures where the risk of failure is considered higher than a large-cap passive index fund, for instance. These funds must continue to be protected for every pensioner’s future by qualified investment fiduciary stewards. Exceptions could be considered for homeowners to borrow against their pensions to reduce their mortgages as is structured in the US, for instance. Remember, it is your money.
Instead, consider these other revenue-raising alternatives. Note these suggestions below are not included in either political party’s platform.
• Create a voluntary “GoFundMe” Bermuda Venture Capital Fund where residents can voluntarily invest as much or as little as they wish — it’s their decision.
• Collect the government taxes and penalties that are still outstanding, estimated at $50-plus million.
• Issue Bermuda Government debt for Bermuda residents. Launch a Bermuda bond offering with low minimum purchases. Everyone can participate; everyone can feel they are contributing; everyone will receive some interest in the process. Use the proceeds to pay down our elephant debt, rebuild country infrastructures, provide cash infusions for start-up businesses, and existing business expansion. We cannot forget this debt owed to foreign investors. It will be a constant burden until it is reduced to zero. Government, whether we like it or not, will be restricted to fiscal conservatism until we generate higher revenue streams.
• Continue to increase foreign direct investment. Larry Burchall was (and still is) right. Government must continue to control Nanci (our debt). We need more people, investments, and businesses investing into our economy to generate new jobs, enhance employee benefits, pay down our debt, and greatly increase the money flow multiplier into our island. We have seen and experienced a recent powerful money flow multiplier. Bermuda needs this (see online at goo.gl/H3E2Jr).
So you know what to do.
Do not take your responsibility as a voter lightly.
Read both platforms carefully.
Decide how these accomplishments and proposed new plans will benefit you, or not.
Make your choice based upon the facts, not fakes and unachievable promises. Choose your candidate of integrity, an individual who will always put your interests and that of our country first before his/her own interests.
In memoriam: We remember Larry Burchall — a true patriot and a gifted writer. He never stopped examining and explaining our financial challenges to his large audience. A man who always made time for people. Who had the courage of his convictions no matter the criticisms. His passion and commitment to our island will not be forgotten. He will be greatly missed. God Bless. RIP.
Martha Harris Myron CPA PFS JSM: Masters of Law — International Tax and Financial Services. Pondstraddler Life™ financial perspectives for Bermuda islanders with multinational families and international connections on the Great Atlantic Pond. Contact: email@example.com
ONE BERMUDA ALLIANCE
Families and Employment
$2500 Jump Start Savings account for newborn Bermudian child; $2 million grant to support the Salvation Army to renovate
emergency and transitional housing for families in need; Introduce an Employer-based Home Loan plan for Bermudians
that incentivise companies to offer interest-free loans forgiven over time to Bermudian staff; Requiring fairness — employers to make occupational pension contributions for both non-Bermudian and Bermudian employees; Enable father
entitlement to paternity leave; Amend the Employment Act for flexible working hours and conditions; Introduction of a living wage for Bermuda; Gradual relief from financial assistance when job not covering basic living expenses.
School readiness, Reach out and Read programme, Pre-school Creative Curriculum; Increase the number of school counsellors
and social workers; Increase After-School programme hours; Expand number of government scholarships; Technical / Stem
dual-enrolment programme at Bermuda College education, Career Pathways / Day Release — youth apprenticeships through
payroll incentives for employers; For teachers, the Stand Alone Teaching Excellence Centre and continued support programme for long-term skills upgrades and Bachelor’s and Master’s degrees broad selection; $1000 supplement to teachers for school supplies; Wi-fi network all schools and infrastructure renovations.
Continue comprehensive system of caregiver support; Two-track plan to enable seniors to remain at home or move to long-term care facilities for quality of life; Stabilise health premium costs; Increase social insurance in line with cost of living; Protect senior’s interest with a Seniors Advocate Office; Institute a Caregiver Resource Centre and financial caregiver allowance; Incentives to local constructions companies to build and renovate senior care facilities; Extended home hospice care allowances.
Balance the budget 2018/2019; Continue Infrastructure development and job opportunities with the causeway rebuild, continued hotel development, waterfront development, marina east proposal, revived cruise ships to Olde Towne; Securing Tourism revival: Implement a vacation rental act; Incentives opportunities for hotels, restaurants, guesthouses, provide taxi rate increases, media programmes for Bermuda-based production and job opportunities; Increase airline capacity; Protecting Bermuda’s reputation from outside economic impacts through aggressive Government intervention to be removed from continued blacklist assaults; Diversify opportunities and supporting start-ups through BEDC, loan guarantees, customs duty deferment scheme and BBDA support and so on. Continued implementation of recommendations of the Commission of Inquiry; investments in environmentally friendly renewables and low carbon fuels and completion of Finger solar energy facility; Building on America’s Cup to grow sports-based tourism; Redevelopment of LF Wade International airport with jobs, retail, landlord and career opportunities.
PROGRESSIVE LABOUR PARTY
Families and Employment
Support for Family-first policies for families with children; Support for affordable childcare for working single parents in career development status; Ensure more affordable housing for families and seniors; Assure that companies provide similar benefits to both foreign and local staff with back-up from Human Rights commission powers; Change structural imbalance of pension benefits between guest workers and Bermudians; Create employment for those in society deemed unemployable; Extend paid maternity leave to 13 weeks and include paternity leave; Provide legislation for unemployment insurance implementation; Ensure that labour rights are protected more efficiently for all. Implement a living wage; Reward financial assistance recipients who find work and require unemployed persons to upgrade their education/skills.
Installation of Wi-Fi in all schools & functioning computer labs; Increase scholarship funding and provide a low rate student loan programme to higher education access; Bermuda College accessibility and financial support; Childcare for working parents in continuing education curriculums; Training and professional development for teachers; Sufficient psychological support for students; Phase out of middle schools to signature schools and removal of geographical restrictions on school choice; Review needs of special education children; School readiness- Early childhood programmes for basic skills achievements. Review of infrastructure for health and safety factors. Increase job training to prepare Bermudians to fill guest worker positions.
Institute annual cost of living increases for seniors tied to rate of inflation; Enact a Charter of rights and Responsibilities for senates: Expand home healthcare benefit under HIP to provide additional income for families; Eliminate government fees for in-need cases; Increase prescription drug benefit for those on Future Care; Develop incentives for private sector creation and development of retirement communities, residential care homes / independent living facilities; Reduce age discrimination; Create an Office of the Public Guardian to assist legally with care and funding for the elderly and other dependent persons.
Balance Bermuda’s budget by 2019; Create an Economic Advisory Council and a Bermuda First advisory group to develop a long-term social and economic plan for Bermuda; Create Tax Reform Commission to review current system of revenue taxation and collection; Create an Economic Diversification Unite to create new economic pillars for Bermuda; Payroll exemption for jobs returning to Bermuda; Create an economic development Bermuda fund; Create a Technology Hub to invent tech start-ups; Tax relief for first-time entrepreneurs; Develop domestic capital markets to compete with local banks; Appoint a Direct or Cooperative Economics to promote community-based economic empowerment; Promote medical tourism; Reverse energy taxes on hotels; Expand airlift and price competition; Increase accountability of the BTA and reform the BTA’s Entertainment Investment Initiative; Develop the vacation rental market; Redevelopment of Hamilton Waterfront; Incentivise construction of affordable apartment in Hamilton; Review the contract between AECON and the Bermuda Government to ensure a better deal.
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