Created: 07/21/2021 8:00 AM
As your readers know, the G7, and now the G20, are pushing for a global corporate tax rate of 15 percent.
Bob Richards, the former Treasury Secretary
There has been more than one concerned reaction to the news on these pages, the most recent from Bob Richards, the former Treasury Secretary.
I am not an economist, but has anyone thought that this proposal could benefit Bermuda?
If Bermuda had corporate income tax (maybe not even 15 percent) and no payroll tax, would all insurance companies be fleeing? Did anyone ask her? If the writing for “tax havens” is on the wall – where everyone wants to live – why go away?
If the payroll tax were abolished, tax collection would not only be easier but it could also act as an incentive to hire more Bermudians.
It could be another major benefit: all corporate tax – set at the right level – should outweigh wage tax receipts and help make up for the deficit.
As Mr Richards pointed out, “multinational corporations targeting paper Bermuda companies for tax purposes”. But do we mind if they leave?
Again, Mr. Richards said in the article: “They were ridiculously expensive in Bermuda because they damage our reputation and the revenue from them was tiny.”
I suggest that the first step is to invite insurance industry executives and finance directors to exploratory meetings to assess their response to the abolition of the payroll tax and the introduction of a corporate tax at a level that is intended to exceed the payroll tax revenue. (I’ll let the accountant-general find out)
At least then we would have a real assessment of the possible escape to other jurisdictions.