*Photo by Nicola Muirhead
*Photo by Nicola Muirhead

There will be no new taxes and no job cuts in the civil service for the next year, Bob Richards revealed in his 2014 Budget statement this morning.

The Finance Minister pledged to cut Government spending by $70 million in the next year.

And he outlined plans to reduce overall spending by 15 per cent in the next three years.

Mr Richards told the House of Assembly that the estimated revenue for 2014/15 was just over $901 million, while the expenditure was expected to fall just shy of  $946 million.

He said the figures indicated both “good and bad news” adding: “The good news is that revenues for the current fiscal year are some $21.4 million greater than originally estimated.

“The bad news is that current expenditures [ie last year’s Budget] are now estimated to be some $32 million larger than estimated.”

In a Budget speech in which Mr Richards stressed the island was moving in the “right direction”, he insisted that there was still much work to do.

He said: “An increase in taxes would hurt recovery and impose new pressures on individuals and families struggling to make ends meet.

“Subsidies currently in place for the hospitality, restaurant and retail sectors — so called concessions — will remain in place for the next financial year.”

Although he ruled out redundancies in the civil service for now, Mr Richards said that the “old corporate culture” and lack of strictness and accountability had still not been squeezed out of some Ministries.

He added: “Further reductions in costs after 2014/15 will not be achievable without either staff layoffs or the outsourcing of non-core functions through mutualization or privatization.

“Remaining as we are, with the current number of civil servants, will not be possible. This is the tough decision that will have to be made.”

Mr Richards said that Government would look to privatization and mutualization to ensure they hit savings targets.

And he told the House that the Public Service Reform Plan would ‘embrace’ the recommendations contained in the SAGE report.

The departments being considered for privatization and mutualization include: Airport Operations, Emissions and Vehicle Testing, Aircraft Registry, Ship Registry, CITV, Waste Management, Vehicle and Equipment Operation and Maintenance, GEHI and Health Insurance, Parks Maintenance, Water and Sewage, Department and Social Insurance, Highway Maintenance and Conservation Service.

Mr Richards said: “We recognize and understand people’s fears about change and we will work carefully to make change work for the individual and the common good.”

During a speech that lasted an hour and 45 minutes, Mr Richards spoke of the need to increase the resident population by attracting financial and intellectual capital from abroad as well as liberalizing the immigration policy.

And he hinted at a possible end to the 60-40 rule.

He said:  “Today’s Bermuda needs capital to recover and there is only one place to get out — from outside Bermuda.

“So people who try to stir up the fear of being overwhelmed by foreigners do so only for political gain.”

Mr Richard’s used his speech to send a bigger message to the rest of the world on Bermuda’s tax status, declaring “Bermuda is not a tax haven”, for all international and European doubters to hear.

And he revealed that France’s decision to temporarily blacklist the island had caused over $40 million worth of French reinsurance contracts with Bermudian companies to collapse.

He said: “We have faced a rising fervour, particularly in Europe, about how much so called Tax Havens are draining the treasures of the G8.

“Bermuda is not a tax haven – our tax system is different. We have no income tax and we do not apologise for that.

“We do not ring-fence companies; exempt companies pay the same tax as local companies.

“We are not taking the attack on our economic model lying down.”

Mr Richards also used his Budget speech to take a sideswipe at BELCO, saying that the high cost of electricity was a “great burden” for the Bermudian people.

He added: “Bermudians have paid dearly for the lack of competition in electrical power.”

He said that since they are both monopolies, BELCO has more in common with Government in terms of accountability and innovation than it does with private, competitive enterprises.

“Ironically while BELCO and the Bermuda Government have no local competition their inefficiency is eroding BDA’s competitive position.

“The time has come to address this issue in both these institutions.”