In a move aimed at jump-starting investment in Bermuda as a gaming destination, Tourism Minister Michael Fahy is proposing legislation to streamline the process for awarding tax breaks for new hotels and similar tourist-related projects.
The Tourism Investment Act 2017 would build on a 2000 law called the Hotel Concessions Act, which was created to encourage investment in hotel development through tax breaks and the removal of certain land restrictions.
Fahy, however, says the act has been hobbled by an “administratively burdensome and costly” awards process that has left its benefits “underutilized,” as he put it, with only $19.3 million in tax breaks granted in the 17 years since they were first authorized.
The lack of any sizable investment in destination gaming as a tourist draw for the UK-governed Atlantic Ocean territory, despite its proximity to the U.S. market, has sparked criticism from prominent lawmakers, and both the Bermuda Tourism Authority and island’s fledgling Gaming Commission, founded two years ago with the passage of the Casino Gaming Act of 2014, have come under fire.
The commission, working with the BTA, has its sights set on a major mixed-use development consisting of luxury residences and a casino hotel proposed by resort giant St. Regis. But the project has yet to break ground.
Gaming experts have blamed delays in vetting developers and granting licenses to the fact that the Gaming Act has required extensive revisions. As a result, the process of finalizing regulations has been slow.
Fahy’s bill would tackle another aspect of the problem by cutting the red tape holding up tax relief.
The tax breaks the bill envisions would be scaled in structure, with greenfield hotel projects receiving a 100 percent exception to customs duty, hotel occupancy tax and land tax for up to 10 years on the condition that after five years 60 percent of the staff is Bermudian. Refurbished hotels would receive similar entitlements but only for a five-year period. These would be further reduced for restaurants and other attractions.
Fahy told lawmakers the bill encompasses “the full spectrum of Bermuda’s tourism product and would demonstrate a shift from the status quo to a jurisdiction that wants to compete in the global tourism market.”
