(CMC) – The ruling Progressive Labour Party (PLP) government has announced plans to reform the tax system to reflect people’s ability to pay.
A livable wage, cheaper healthcare, lower power costs and more competition in the mortgage market to drive down costs are also in the pipeline, as Governor John Rankin delivered the traditional Throne speech to herald in the start of a new parliamentary term.
But Opposition Leader Craig Cannonier countered by saying the Throne Speech fell short on job creation and economic development,
The first measure in tax reform will be a change to social insurance contributions to end fixed-rate contributions in favour of a system based on a percentage of income.
“This change will increase the take-home pay of low-income workers, while ensuring that our pensions fund is sustainable for the future,” the Governor said on the day which marked the PLP’s first general election success 20 years ago after it had played second fiddle to the now defunct United Bermuda Party for 30 years following the introduction of party politics in 1968.
Rankin said that more changes would be announced in the budget speech in February.
He said more relief on mortgage payments, designed to boost disposable income, which can be pumped into the economy, saved or invested,
“The government is determined to provide relief to hard-working families through a series of measures, including but not limited to, engaging alternative financing regimes, guarantees to reduce mortgage costs and repayments and where required, legislation.”
Rankin said banks in Bermuda had used American interest rates on mortgages and in some cases raked in a 24 per cent return on equity — four times the average in the European Union.
“Not all local banks have increased mortgage rates and our tax system should not prevent families from taking advantage of lower rates at a competing bank.
“To boost competition between existing banks, stamp duty on mortgage refinancing will be eliminated for amounts under $750,000, allowing Bermudians to move their mortgages to a bank that may charge a lower rate without having to pay taxes on that transaction.”
Rankin said that lifestyle diseases and inefficient health services delivery had combined to make the cost of healthcare on the island “unsustainable”.
But he added that “the government will change the way we pay for healthcare and make it more affordable by expanding access to coverage at better rates.”
Rankin said the high cost of health insurance is also expected to come down and “entrenched, vested interests” in the insurance industry will be taken on,” he said, adding “the needs of Bermudians must finally take precedence over insurers’ profits.
“Therefore, upon conclusion of the necessary consultation, the Ministry of Health will advance a national health plan that will put all persons in Bermuda into either one or two health insurance pools, which will reduce the cost of health insurance. This fundamental reform will be the subject of legislation during this session.”
As predicted, the cultivation of cannabis for medical use and permission for licensed doctors to prescribe the drug will also be legislated.
The government also announced a crackdown on plastic waste — single-use plastics such as straws will be banned by 2022, with a charge imposed on their use in the two-year run-up to their elimination.
Cannonier, whose One Bermuda Alliance was trounced by the PLP in last year’s general election, said the government missed an opportunity to help people struggling with the cost of living, while small businesses could be hurt by planned tax reform.
He said the theme of economic inequality was laudable but added: “There was no real mention of creating jobs or economic development, which is the best way of helping people cope with the cost of living and inequality.”
Bermuda currently has a national debt of US$2.4 billion, with unemployment running at seven per cent.