Budget 2025: Here’s an overview of revenues, spending, tax reductions and public debt for the year ahead…
Photo: Premier David Burt & Government Members are joined by public school students ahead of the budget statement
The era of budget deficits has come to an end.
So declared Premier and Finance Minister David Burt, as he presented Government’s fiscal plans for the year ahead…
“This is the eighth Budget of this PLP Government since returning to office in 2017, and through hurricanes, economic headwinds, and a once-in-a-century pandemic, this Government has stayed true to its mission: fairness, opportunity, and dignity for all Bermudians.”
Government is projecting more than a $43 million surplus in the fiscal year from April 2025 to the end of March 2026, with projected Government revenues of $1.43 billion.
That’s a near $180 million revenue boost on the previous year, largely driven by projected Corporate Income Tax revenues.
This comes as revised figures show a $19.7 million surplus for the last budget year…
“This surplus is $19.5 million more than originally estimated and represents the first Consolidated Fund surplus to have been achieved in 21 years.”
Most of the previous year’s boost came from payroll – up $26 million on original estimates – driven by local job growth and higher salaries in the international business sector, the Premier says.
Turning to this financial year, Corporate Income Tax revenues are expected to come in at the previously touted figure of $187.5 million.
This projected windfall enables a $56.2 million investment in healthcare, and compensates for any lost Government revenues from implementing some of the cost-of-living reductions heralded in the Pre-Budget Report…
“The Government will reduce the customs duty rate on all building materials and supplies currently charged above 10%…
Two years ago, the fuel duty on fuel used to generate electricity stood at 20 cents per litre… With this Budget we will reduce that tax to just 4 cents per litre…
Customs duty will be eliminated on all motor vehicle parts imported into Bermuda…
Government will reduce the monthly tax on mobile phones by 50%, from $12 to $6.”
While these reductions will come into effect on July 1st, as previously reported other reductions will be delayed.
A reduction to the base rate of land tax from $300 per year to $150 will not take effect until January 1st 2026… and a 10% reduction in Licensing Fees for Private Cars will not start until the next fiscal year on 1st of April 2026.
With the increased revenues, Government plans to spend more than 1.11-billion, a 118 million increase on last year’s expenditure.
Nearly half of that is the aforementioned $56.2 million on healthcare, and also includes an additional $18 million-plus across Government ministries… continued social investment of $14.9 million… and new wage, salary and benefit agreements with the public sector totalling around $26 million.
$149.8 million will go on capital expenditure…
“The most significant items of capital development in this Budget include road works and the installation of a new asphalt plant, investments in affordable housing, upgrades to the Tynes Bay Waste Treatment Facility, capital investments for the Hospital, and the commencement of the replacement of Swing Bridge.”
Government’s budget surplus, spending and cost-of-living provisions have not come without an impact on our debt.
Gross debt has been reduced over the past couple of years by paying off of a 50-million loan with sinking fund monies.
However, our net debt – that is, our debt measured against our reserves – has increased substantially.
After borrowed monies in the sinking fund covered budget deficits in 2023 and 2023, Government changed the law last year so that such borrowed monies could shore up other public funds.
By March this year, the sinking fund figure had been revised to less than $40 million, a reduction of $180 million over two fiscal years.
All the same, the Premier expects to pay off half a million of our debt next year – presumably due to the expected Corporate Income Tax revenues…
“…during Fiscal Year 2026/27, the Government expects to have sufficient reserves to repay at least $500 million of Government debt, thereby reducing the Government’s gross debt by $500 million, ending the year with net debt of $2.8 billion.”
The Premier said the Corporate Income Tax Agency has been given an operational grant of $4.78 million, with the long-term plan for it become self funding through future CIT revenues.
Meanwhile, the Tax Reform Commission is expected to deliver its recommendations on managing the new tax environment in June 2025.
