Economic benefits ‘far outweigh’ hotel’s 15 years of tax breaks – Minister – The Royal Gazette

Fairmont Southampton (file photo by Akil Simmons)

The economic benefits to Bermuda from the reopening of the Fairmont Southampton will ‘far exceed’ the value of the concessions to support the hotel’s redevelopment, the Minister for Tourism insisted today.

Vance Campbell earlier tabled a bill in the House of Assembly that would provide tax relief for 15 years to the iconic station.

A government spokesperson confirmed that the Ministry of Finance had forecast the value of the proposed concessions.

But he added that “details of this and other aspects of the bill will be part of the debate” in the House on May 6.

Mr. Campbell explained: “It’s a very simple premise.

“Without this help, there would be no hotel; there would be no tax revenue since there would be nothing to tax; there would be no jobs at the hotel; and tourism would continue to suffer.

“The bill introduced today is another step in our economic recovery.

“This redevelopment represents an investment of hundreds of millions of dollars in Bermuda.

“The value of any relief provided will be far outweighed by the economic benefits to the people of Bermuda.”

Gencom, the Miami-based investment firm that owns the hotel through its subsidiary Westend Properties, said earlier that about $400 million was being invested in the Fairmont Southampton project, including $200 million in renovations.

Mr Campbell quoted the budget statement of David Burt, Prime Minister and Finance Minister, when he said that “although tourism contributes only 5% to our gross domestic product, it has contributed about 14% of jobs in Bermuda in 2019”.

The Tourism Minister added today: ‘The government is focused on creating jobs, renewing tourism and providing career opportunities for Bermudians.’

Under the Fairmont Southampton Hotel Act 2022, developers would be entitled to full duty relief for 15 years on building materials, furnishings, fixtures and fittings required for the redevelopment of the hotel.

There would be an exemption from tourist tax for 15 years from the opening of the hotel.

The legislation would mean property tax would not have to be paid for a period beginning six years after the hotel opened until the 15th anniversary of its opening.

He added that to qualify for the property tax exemption, the developer must confirm that at least 70% of the hotel staff are Bermuda over the nine-year term.

The bill also provides that there would be full exemption from the employer of payroll tax for 15 years after the opening of the hotel.

In this case, the Minister for Workforce Development will confirm annually “that a management training program for Bermudians is underway” at the hotel.

The 2017 Tourism Investment Law allowed similar concessions to customs duties, hotel tax and payroll tax, but limited them to five years in the case of renovated hotels.

It specifies that the property tax exemption applies to new hotels.

Mr Campbell told MPs, during a 15-minute House sitting: “Investor confidence in the island and its future must be met through nimble and flexible approaches to secure the economic growth needed for recovery. economic.

“The granting of concessions proposed by the Bill for 15 years represents this flexible approach and Honorable Members will note that the extension of concessions for this period retains the same protections contained in the Tourism Investment Act 2017. .”

He added: “I also want the public to know that this bill deliberately contains the necessary protections for employment in Bermuda and Bermuda’s upward mobility in the industry.

“The government is committed to ensuring that Bermudians who choose a career in hospitality are treated fairly and given every opportunity to grow in the industry based on their work ethic, interest and commitment.”

In his first ministerial statement since being appointed tourism minister earlier this month, Mr Campbell said the bill was “of national importance”.

He added that the bill delivers “a key commitment made by the government in negotiating the full extent of support needed to make this redevelopment a reality.”

Mr Campbell said: “I can inform this honorable Chamber that these discussions are at a technical and advanced stage, involving lawyers from both parties working on the various practical aspects of the agreed Heads of Warrant.

“The Department of Finance is fully engaged in these matters and I expect the Honorable Prime Minister and Minister of Finance to be able to further brief this Honorable House when this Bill is debated.”

Craig Cannonier, the shadow tourism minister, asked if the government sees the 15-year concessions “as a new standard for the industry”.

Mr Campbell said: ‘As the government is required to deal with future development applications under this order, we will be looking at the conditions we need to meet for this to happen for Bermuda.’

He added: “We will continue to be flexible as needed.”

Michael Dunkley, also an Opposition One Bermuda Alliance MP, pointed to the special development order issued for the Fairmont Southampton in 2009.

He asked, “How does this law impact this SDO? Will it fall or be used or will it be changed? »

Mr Campbell replied: ‘The 2009 SDO set the parameters for development and if this plan needs to be revised, it will be up to the developer to follow the law and make a request.’

This decree granted planning permission in principle for 130 fractions of tourist and residential units.

Vance Campbell, Minister of Tourism (Photograph provided)

A Gencom consultant said earlier this month that the government was aware the company intended to “submit an amendment to the existing SDO”.

She added that economic, traffic and environmental studies were underway.

Environmental groups raised concerns after receiving concept drawings in mid-2021 which proposed more than 350 residential units on the site.

It is not known if the plan has changed since then.

* To read the bill or the Tourism Minister’s statement in full, click on the PDF files under “Related Media”.