Eugene Cox Shrugs Off PwC Budget Criticisms

by Mike Godfrey, Tax-News.com, New York

21 February 2002

The Bermudian Finance Minister, Eugene Cox yesterday shrugged off criticisms from international accounting firm PricewaterhouseCoopers and the leader of the opposition over last Friday's budget, dismissing their comments as 'alarmist'.

Mr Cox's most recent budget has been described by many, including opposition leader Grant Gibbons, as a 'sweetheart', or election budget, containing no significant tax increases, and increasing spending in several key areas. However, both Dr Gibbons and PwC expressed concerns at the amount of extra Government borrowing provided for within the plans, predicting that if the expected economic upturn does not occur, the Finance Minister will either be forced to borrow more or increase taxes in order to balance the books.

'The simple fact of the matter is that they have had to borrow because they haven't delivered on the tourism front either in providing jobs or attracting visitors to spend money here,' Dr Gibbons told The Royal Gazette earlier this week. 'I also feel Mr Cox must be a gambler because if the economy doesn't come around this year he will face the very frightening consequences of having to take on more debt next year or increase taxes to pay for it due to the very large amount of capital spending which they are continuing with.'

PricewaterhouseCoopers was more measured in its criticism of the Finance Minister's 2002 budget, simply stating that: 'We...question whether some of the capital expenditures could have been deferred to a time when the construction industry is not as stretched, reducing the impact on the deficit and maintaining employment levels in that sector.'

However, Mr Cox condemned the accounting firm's criticisms as 'vague', and defended his decision to continue with significant Government spending as an investment in 'hard assets' for the future.

'Does PwC wish to see cuts in law enforcement? Cuts in the education budget? Cuts in health care services?' he asked. 'It would be more helpful if comments about Government's spending decisions were specific, informed, and well-reasoned.'

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