“The economy is growing once again after six years of contraction. The major parts of the economy… are much stronger than when we first took the reins of Government.”

“We are winning the war on spiralling public debt… Our progress, and the prospects for further economic growth that it signals, has created a window of opportunity enabling us to confront more vigorously the fiscal challenges that cloud the future of every Bermudian.”

“Our first order of business in this regard is to eliminate the deficit, which… has been driving our debt, and the huge costs to service that debt, to levels that threaten Bermuda’s solvency. This situation undermines our ability to support the needs of the Bermudian people. We are going to fix it.”

The plan behind the 2016/17 Budget

The Budget puts in place a three-year plan to eliminate the deficit, which has been driving unsustainable growth in public debt. The objective is to increase annual revenues by $150 million over three years. To achieve that target, reforms will be introduced in FY2017/18 to broaden the tax base, with progressive measures to ease pressures on lower income earners.

Budget Highlights

• Current Account balance before debt service achieving a surplus position ($75.3 million est.) for the second consecutive year.
• Projected deficit of $199.4 million, $132.2 million less than the 2013/14 deficit.
• Debt service costs at $187.4 million, 10.3% higher than the 2015/16 allocation of $169.9 million.
• Gross public debt at $2.444 billion, or $2.357 billion net of the Sinking Fund.
• Tax measures include:
  • Payroll tax increasing 1%, with the rate of tax recoverable from employees rising 0.5%.
  • Duty hikes on wine and spirits (10%), tobacco (5 cents/cigarette, $1 a pack) and fuel (8 cents per litre)
  • Rollbacks on payroll tax concessions to hotels, retail and restaurants
  • Land tax rates adjusted to retain revenue levels.
• $4.3 million in additional funding support for the Bermuda Tourism Authority to continue the revival of the tourism economy.
• Economic stimulation through infrastructure development includes the St. George’s hotel, Ariel Sands, Morgan’s Point, America’s Cup Village and Swing Bridge.