Philip Barnett

Restaurant owners have reached out to Government for help after more than a year of economic troubles.

The Finance Ministry is now considering temporarily deferring payroll tax for those able to show they’re not making a profit.

According to the Bermuda Chamber of Commerce, the number of applicants is likely to be high should Government give the plan the green light.

”The question was becoming who’s going to close first,” said Philip Barnett, president of the Island Restaurant Group. “That’s what it seemed to be coming to.”

Mr. Barnett, who is also head of the Restaurant Division of the Chamber of Commerce, said that the effects of the economic downturn were made worse by the recent increase in payroll tax.

In March, the Payroll Tax Rates Amendment Act was passed, increasing payroll tax by two percent.Mr. Barnett said almost three quarters of restaurateurs believed that the increase wasn’t going to affect restaurants because of the way the statement was read in the budget, but later learnt the increase was across the board.

”We thought that we were in a separate group when they raised the payroll tax,” he said. “Many restaurants had not been collecting the extra tax from the employees, so it was a double whammy.

”It’s difficult to find money to pay this right now. The majority of restaurants ended 2009 in a negative profit state.

”When we were canvassing our members at the end of the first quarter this year, we couldn’t find anyone who could say they were in a profitable position.

”Obviously, there is a seasonal element. The summer can be pretty good, but speaking for my group, our numbers are not any better then they were last year, and coming out of a rough 2009, that’s not good.”

He said he was impressed by how quickly representatives from the Finance Ministry agreed to meet with the Chamber of Commerce to discuss the issue.

”The Minister and her senior officials have been absolutely fabulous. She was is very concerned, and everything moved forward very quickly.”

The Finance Ministry released a statement this week, revealing it was considering a temporary deferment of payroll tax for restaurants not making a profit.

Said Mr. Barnett: “Originally it was going to include just the members of the Chamber of Commerce Restaurant division, but in the end it was extended to all restaurants.

”It goes to show that this is what happens when we come together and speak with a single voice.”

Such a deferment would only be applied to the restaurant’s share of payroll tax – not its employees. The tax would eventually have to be repaid.

Ms Cox said: “All restaurants are going through a particularly difficult situation, and the Ministry is considering signing a memorandum of understanding with the Restaurant Division of the Chamber of Commerce in connection to a temporary deferral of payroll tax.

”This temporary deferral will apply to all restaurants, and will not be limited to members of the Restaurant Division of the Chamber of Commerce.

”The Ministry is keen to assist the restaurants during these difficult times, which will hopefully facilitate this sector’s return to a sound financial footing in the not too distant future.”Ms Cox stressed the important role restaurants played as employers. She added her hope that the deferral would prevent restaurants from having to cut staff, should it be granted.

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