APP questions legality of pandemic levy

The Alliance Party for Progress (APP) on Friday raised concerns about whether the controversial Pandemic Contribution Levy which took effect on Friday is legal.

The Bishop Joseph Atherley-led party contends that a 1995 amendment to Section 112 of the Constitution by the then Owen Arthur administration prohibited any future Government from being able to reduce the pay or status of public officers “to their disadvantage”.

“Therefore, one wonders whether the Government is concerned if its proposed Pandemic Contribution Levy – tax or sanction – runs contrary to Section 112 of the Constitution, particularly if it is the intention of the Government that public servants working for $6,250 and above will be trapped in its net.

“If the proposed levy is intended to only relate to private sector employees earning $6,250 and above, then they may feel that the sanctions or the Pandemic Levy is discriminatory,” the APP said in a statement.

It insisted that Government must not “become politically lawless”, particularly since there are no opposition voices in Parliament.

Effective Friday, a worker earning an income of more than $6,250 monthly, is required to contribute one per cent of his/her monthly earnings for the next 12 months.

The Pandemic Contribution Levy will also be applied at a rate of 15 per cent of the net income of companies in the telecommunications and commercial banking sectors, retail sale of petroleum products, and general and life insurance industry that had a net income above $5 million in 2020 and 2021.

The levy was designed to get these commercial entities to contribute to the Government’s $1 billion COVID-19 bill.

APP contends that the need for the Pandemic Contribution Levy on select corporate entities and individuals earning $6,250 or more was concerning since the Government negotiated affordable loans from the IDB as part of a larger package with the International Monetary Fund, the European Investment Bank, and the Development Bank of Latin America (CAF) totalling some US$492 million and all intended for pandemic support.

The party argued that if the increased debt was to assist Barbados with the fallout from the pandemic, projected to result in a loss of about $500 million in revenue, there is no need to “choke and rob Barbadians” since in five years’ time when the interest payments become due, they will be accommodated in the Estimates.

It, therefore, questioned whether the money from the tax will be placed in a special account and held until the interest on the loan becomes due, “or will it be squandered to finance the 2022-2023 deficit which cost in excess of $76 million”.

“This is yet another example where the actions of the BLP [Barbados Labour Party] have been costly to anyone but itself. When it restructured the national debt, it eroded some $1.3 billion from the NIS. Now its levy on select individuals – even if constitutional in the case of public servants – will increase the cost of living for them. This is tax policy that punishes and is disadvantageous,” APP added.

It charged that the Government now seems to be introducing austerity in small doses and questioned what further pain it had in store for the country.

“We can only plead with the Government to follow the rule of law, consult and be responsible stewards of the mandate given,” APP said. (BT/PR)