The Association of Bermuda International Companies (ABIC) today expressed broad support for the newly-released Budget’s efforts to assist a larger cross-section of the community in vital areas such as education, housing and transport – but expressed concern about the growth of Government expenditures and debt loads, and the additional taxes imposed on businesses to support them.

The International Business organization also noted that while increased taxes to their members were supporting Government initiatives, there was nothing in the Budget to address their own needs.

“We note once again that International Business is by far the biggest contributor to the Bermuda economy, and that many of the new initiatives are able to be funded largely from the contributions of this sector,” said ABIC Chairman David Ezekiel.

“We also note that there are no specific allocations in the Budget which addresses the needs of International Business, such as streamlining the work permit process,” he added. “We would hope that due provision has been made for such improvements in the budgets of individual ministries.”

Mr. Ezekiel also said that further increases in payroll taxes, which also fall on the employer, “is not a good sign.”

“Payroll tax has now become the single major expense for many companies in the International Business and local sectors,” he said. “Especially hard hit by these increases are the ‘service companies’ in each of these sectors, whose major expense has always been payroll. Service companies are the lifeblood of any economy, and we would ask Government to ensure that these businesses are encouraged to grow.”

To do otherwise, he added, would encourage the trend of increased outsourcing to jurisdictions outside Bermuda. ABIC has previously warned that the move to outsourcing will start to have a major impact on entry level job opportunities for Bermudians in the international sector, which is to be avoided at all costs.

ABIC also noted that the increased size of the budget, which exceeds the projected growth of the economy, including inflation, and payments to support higher Government debt will have an impact the future health of the Bermuda economy.

“The substantial increase in borrowing and the total indebtedness of $465 million will start to have a significant impact on future Budgets as debt service costs increase,” said Mr. Ezekiel.

“We believe many efficiencies can be introduced in the public sector, and note with some concern that one in every seven employees in the Bermuda market is now an employee of Government – an inordinately high proportion.”

ABIC is fully supportive of Governments intention to follow through with its undertaking to provide free bus and ferry transport, but expressed concern about attempts to offer this to Bermudians only.

“We feel that free public transport, when combined with the introduction of school buses for private schools, will greatly reduce traffic on the roads, which is clearly a major concern for all of us in the community,” said Mr. Ezekiel.

“On this point, however, we were alarmed to note in the Budget statement that free transport would be provided to Bermudians only. We would ask Government to urgently re-visit this policy, as we believe it would be entirely inappropriate, not only on moral grounds, but also in the unnecessary administration load.

“There are many Bermuda residents employed on work permits whose economic needs are as severe as those of many Bermudians, and we believe that any new initiatives should be introduced for all residents, and be extended to our valued tourists” he said.

In a final observation, Mr. Ezekiel noted that his organization would have expected to see some funds allocated towards improvements in postal service. Bermuda businesses and residents, he said, deserve a first-class postal service and much needs to be done to restore confidence in the postal service, “which has over the last decade become the carrier of last resort in Bermuda.”

ABIC and its members, he added, “stand ready to assist Government in moving forward with sharing the benefits of our growth with the entire community, and we will continue to be a partner and a resource as we move forward.”

ABIC, the voice of International Business, represents more than 140 international companies incorporated in Bermuda.

Attachments:
2008 Budget Statement