Govt braces for revenue shortfall
Premier Paula Cox yesterday revealed that Government revenues are expected to be between $10 and $20 million less than the $940 million projected in the February budget.And she said spending is expected to be $950 million, $43 million higher than expected.The figures mean that Government will run a current account deficit of between $20 million and $30 million if the situation does not change by March 30 next year, instead of a projected $40 million surplus.It was not clear yesterday what effect that would have on Government's $1 billion debt, but Ms Cox said Government had negotiated a $200 million three-year loan facility with Butterfield Bank.In the February Budget, Ms Cox, who is also Finance Minister, had projected a $146 million budget deficit when she announced the 2011-12 Budget in February.“In order to remain as close as possible to Government's 2011/12 budget targets, Government has instituted several measures in order to realise further cost savings,” Ms Cox announced.“In particular, the Government has instituted a hiring freeze on non-essential posts and targeted the following areas for even further spending reductions in 2011/12: consultants, training and travel, materials and supplies and capital expenditure.”Ms Cox told the press conference that though employee costs made up almost half of Government's expenditure, “there's no present intent to have a ruthless scissorman in terms of the personnel”.Ms Cox said Government was considering a range of tax changes for the next financial year. She emphasised that all of the proposals were for discussion purposes only and that Government will hold public meetings on them in January.These include:l Changing Customs duty rates for personal imports, which now range from 35 percent at the Airport to as low as five percent.l Lowering the “high” betting tax rate of 18 percent to encourage “more betting tax transactions being based in Bermuda”.l Raising “sin” taxes, but Government is aware that increased alcohol taxes can hurt tourism.l Changing the licensing fee for vehicles from a tax on size to a tax based on fuel efficiency.l Reducing payroll tax concessions for hotels and restaurants.l Limiting land tax relief to pensioners.l Imposing land tax on vacant land.
A policy exempting senior citizens from paying vehicle licences has been abused, Government revealed yesterday.Premier Paula Cox's Pre-Budget Report said the policy put in place in 2007 had seen the number of vehicles registered to seniors jump by 26 percent.And the number of H Class vehicles the largest class of car registered to seniors had risen by 358 percent since the policy was introduced.Overall, the policy had cost the taxpayer $17 million, the report said.“The Government will examine this tax expenditure with a view to putting into place a provision that assists seniors in need and is less open to abuse,” the report said.
