OBA’s DeCouto On Budget, Taxes & More
“In this year’s Budget, the Government boasted about various tax cuts. However, while no one minds a few extra dollars in their pocket, some of these cuts are relatively minor, or give more money back to those who don’t need it,” said Shadow Finance Minister Dr Douglas De Couto.
He said, “The One Bermuda Alliance suggests Government makes more targeted and impactful tax changes that will help those who need it most.
“For example, the Belco fuel tax cut. We’ve worked out two examples, one for a household using 700 kilowatt-hours (kWh) per month, and one using 1,400 kWh – a larger house.
“In the first example, the amount of Government taxes is $13.15 per month or $158 per year. In the second, larger house, it’s $26.35 per month, or $316 per year.”
“The Government has promised a further 20% tax cut on fuel. That’s worth $32 per year for the 700-kWh household, and $63 per year for the 1,400 kWh household. That tax cut, while not nothing, is not exactly a huge amount of money.
“For example, it’s a lot less than bag of groceries. And does it make sense for those who can afford large Belco bills to get a bigger benefit than those who are scrimping just to keep the lights on? Is that fair?”
“Looking at payroll tax, it’s worth remembering that it was the One Bermuda Alliance that first created the progressive payroll tax structure, where high earners pay a higher percent of payroll tax. The PLP Government has simply adjusted the dials on the OBA’s approach. However, there are some fundamental changes worth considering.
“For example, payroll tax is based on your gross pay. That includes the amount you pay into your pension, social insurance, and health insurance. So as your health insurance costs go up, so does the amount of payroll tax you pay.
“For most people right now, health insurance costs are rising rapidly. Is it fair that the Government earns more payroll tax on the back of your rising health costs?
“We suggest that the Government switches to a payroll tax system based on net pay, that is, the money that actually ends up in your pocket at the end of the week or month.”
He adds: “Another problem is that the payroll tax bands don’t adjust with cost of living. We know some employers try to give raises to their staff for cost of living, especially in the international business sector, but also some local businesses that can afford it.
“This can have an unintended side effect, when the new wages move into the next payroll tax band, increasing payroll tax. In fact, this might even make employers wary about giving these raises or hiring that next staff member. Is it fair that you should pay a higher payroll tax rate due to cost of living increases?
“We suggest the Government create legislation to regularly revise the payroll tax bands to reflect the cost of living.
“These are changes that could have real impact on the cost of living for all Bermudians, and we hope that the Government gives them serious consideration.”
The people who don’t vote OBA generally do not care for what you have to say Dr DeCouto. They are more interested in who is in chathe and less about why the country is in a shxx state and those most affected are those who either vote for the government or abstain instead of voting for change.