The Bermuda Government needs to tell people what its plan is to address the potential effects of the Economic Substance Act.
The Act, which was passed at eleventh hour owing to constantly moving goalposts by the European Union, is now in force.
I commend the team that got it over the line, and the One Bermuda Alliance will support efforts to maintain Bermuda’s blue chip status.
This is yet another attack by a foreign power on our business model, and the imposition of further regulations is a big bag of expensive lemons.
There most certainly will be sectors of our economy that suffer absolute losses in the next six months to two years as a result of this legislation; however, there may be opportunities as well.
Those companies that are on the edge of proving economic substance in Bermuda may be able to bolster their staffing here to improve their case of adequacy.
I believe the Government shares the hope that some good could come from EU substance, but hopes and plans are two different things. To turn lemons into lemonade, you need sugar. But where is the Government’s plan?
The Premier has known this was coming for a long time, having committed to the compliance route in a letter to the EU’s Code of Conduct Group in November 2017.
Most of proving substance has to do with boots on the ground. What incentives have been rolled out to ensure that those sectors of international business — besides insurance and banking, which are most likely to be able to meet EU substance requirements — will choose to expand their footprint here as opposed to somewhere else?
The OBA hopes that any expanded footprint is filled with Bermudians in the first instance, especially those with translatable skills affected by M&A in insurance. It is quite possible, though, to seize fully whatever opportunity lies in substance requirements, that a significant number of jobs will be filled by new guest workers.
While any increase to our resident working population will bring more spending power to help a faltering retail sector, spread the cost of healthcare over a younger base and broaden the tax base so all Bermudians feel less squeezed, a successful immigration stimulus also requires a plan.
The Progressive Labour Party placed a lot of political importance on comprehensive immigration reform when in Opposition. It has been 18 months since the election and it appears that no progress has been made on that front.
Should the silver lining in EU substance require an increase in resident guest workers, is the PLP willing to sell that as a good thing to Bermuda or shall we risk losing out to all the other jurisdictions reacting to the window to comply?
Nick Kempe is the Shadow Minister of Finance and the Opposition Senate Leader