Traditional barriers in Bermuda are to come down as the island opens some doors in a bid to boost the economy with foreign investment.

David Burt, the Premier and Minister of Finance, announced an end to the 60:40 rule to guarantee Bermudian majority ownership of island businesses.

Now only 40 per cent Bermudian ownership will be required.

Mr Burt also signalled that global legal firms could get an easier path to an office in Bermuda, while the Government will examine ways to expand “the types of banks that can operate in Bermuda”.

Mr Burt told MPs that many Bermudians were “resistant to the idea of foreign capital as it has never benefited them”.

He said: “Foreign investment is not the enemy, it is required to sustain our economy and our way of life.

“The true enemy of all Bermudians who feel marginalised is an unbalanced and unfair economy that allows the haves to get richer while the have-nots fall farther behind, not foreign investment.”

Mr Burt also announced that payroll tax for the island’s lowest earners is to be cut.

He said that employee-rate bands will be adjusted to give tax relief to people earning less than $96,000 a year.

The lowest employee band will be reduced by 0.75 percentage points to 4 per cent.

Mr Burt also pledged that the 2018-19 financial year will be the last in which the net level of debt, expected to stand at $2.42 billion by the end of March, will increase.

He said that the Progressive Labour Party government would move away from “austerity” to “stimulus”.

Mr Burt admitted a relaxation of the 60:40 rule would “face opposition from both sides of the political spectrum”, but insisted it would increase access to capital for Bermudians.

Mr Burt said: “We need more economic activity in Bermuda and that means we must welcome investment from non-traditional quarters and not shy away from the competition it may create.”

He added: “This government is determined to create the conditions and opportunities that usher the ‘left behind’ from the stands and sidelines to the playing field.

“Bermudian entrepreneurs should not have to rely on their inheritance or banks that often refuse to lend to fund their ambitions.”

Mr Burt said: “In the truly competitive marketplace, the consumer will always be the winner as all Bermudians want and seek lower prices for goods and services.”

He also signalled that planning rules will be relaxed to allow higher residential and mixed-use buildings in the Hamilton economic empowerment zone with a view to maximising space and boosting the economy.

Condominium ownership restrictions will be eased in the same area to boost demand, generate wealth and give extra work to the construction industry.

The Government will also not implement the second phase of a payroll-tax increase introduced by the former One Bermuda Alliance administration, so tax rates for employers will remain unchanged.

Mr Burt said the payroll-tax bands change would mean a couple earning $48,000 a year each, will get a $720 annual increase in their take-home pay.

A worker who earns $48,000 a year will be $360 a year better off, those on $36,000 a year will be $270 better off, while those on an income of $60,000 will also take home an extra $270.

Mr Burt, delivering his first Budget, told MPs: “Anyone making less than $96,000 will see a reduction in taxes; anyone earning more than $96,000 will not see any change in their payroll taxes.”

He said: “This reduction in taxes will reduce the Government’s payroll-tax yield by approximately $5.1 million.”

He added that a loophole to allow business owner-managers who earn their income in whole or in part through a share of profits to declare “notional salaries” — less than they earn — for tax purposes will be closed.

Mr Burt said: “To further address this problem ... the notional salaries will be replaced with a requirement to declare all income received on a cash basis.”

He added: “This change will improve transparency, assist enforcement and largely eliminate the risk of under-declaration and underpayment.

“It is estimated that this change will increase payroll-tax revenues by at least $10 million.”

A proposed professional services tax on accounting and law firms will not be imposed.

Mr Burt was speaking as he told the House of Assembly that total expenditure for the year will be $1.18 billion, an increase of $2.5 million on the OBA’s budgeted spend for 2017-18.

He said: “This was achieved despite the Government’s pay awards to public officers, which cost the Government approximately $9 million.”

Capital expenditure — spending on bricks and mortar — will be $62.2 million for the year, $5.2 million lower than the original estimate for last year.

Revenues for the year are estimated at $1.09 billion — $47.5 million or 4.6 per cent higher than the original estimate for the last financial year.

Mr Burt added: “This level of spending in necessary in order for the Government to implement its growth strategy while ensuring we have the facilities and equipment necessary to deliver public services.”

Sin taxes are also set to rise, with an increase in tax on tobacco “to reduce the inconsistency between duty rates on cigarettes and tobacco”.

Mr Burt added: “Finally, the duty on wines will be raised by 30 cents per litre in April 2018 to achieve additional customs revenue.”

A proposal to tax commercial rents has been shelved, but land tax rates on commercial properties will go up by 5 per cent as a temporary measure.

The move is expected to bring in an extra $15 million a year, although economic empowerment zones will be exempted.

Mr Burt said the Tax Reform Committee will continue to examine commercial rents.

He said a new sugar tax on some products, which is to be finalised after next month, will go ahead.

He added that “healthy food items” would face a reduction in tax or have that tax eliminated altogether.

Duty on eggs and many vegetables, including potatoes, carrots and cauliflower, and fruit such as oranges and apples will be reduced to 0 per cent from 5 per cent.

Mr Burt added: “To reduce the cost of living, the Government will lower the duty rate on textiles, which include linen and blankets and shoes.”

Duty relief will also be given to sports clubs with youth programmes, which will include full duty relief on uniforms and equipment.

Mr Burt told the House: “This budget, as should be every budget, is about the people.

“The results of July 2017’s General Election are concrete proof of the rejection of trickle-down economics.

“This government accepts the economic realities of Bermuda today, but we are determined to forge a future that defies and shifts those realities and empowers this country’s citizens.”

He added: “Traditional businesses will be respected but must compete for their market share and come to terms with the voices of others at the table who will, in turn, drive this economy.”

• To read the 2018-19 Budget Statement in full, click on the PDF link under “Related Media”