#BTColumn – Will public servants be disadvantaged by Pandemic Levy?

Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.

by Erskine Branch

In the recent Budget speech, the Prime Minister announced that:  “With effect from April 1, 2022, where an individual receives an income of more than $6,250 monthly, the individual shall contribute 1 per cent of his monthly |earnings as a Pandemic Contribution Levy on Income for 12 months only. This Levy is payable in addition to the individual’s income tax obligation and is not deductible for tax purposes.”

We hope that an overwhelming mandate – where there are no opposition voices in Parliament – is not causing the Government to become politically lawless.

We tend to recall that in 1995, the then Owen Arthur administration made an amendment to Section 112 of the Constitution of Barbados,  with the laudable intention  that no future Government would be 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 $6,250.00 and above – will be trapped in its net.

If the proposed levy is intended to only relate to private sector employees earning $6,250.00 and above – then they may feel that the sanctions or the Pandemic Levy, is discriminatory,.

We remind the BLP that: “Good public policy requires ‘clarity of purpose and certainly of incidence” and that good governance requires consultation, despite having dominance over the law-making chamber.

We find the need for Pandemic Levy on select corporate entities (not Supermarkets) and individuals earning $6,250.00 or more, concerning, especially since the country was told that funds from the IDB formed part of a larger package negotiated by Government 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.

It is observed that the justification advanced by the government for the increased debt was that it was to assist Barbados with the fallout from the pandemic, which was projected to result in a loss of revenue totalling about half billion Barbados dollars.

It was reported that some of these loans were understood to have “exceedingly generous terms,” and are said to be over 20 years with a five-year moratorium and an interest rate of some 1.25 per cent.

There is therefore 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.

We therefore wonder whether the $165M which the Government intends to inflict on select corporate entities and individuals earning $6,250.00 or more, 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 $76m.

While we are happy that Barbadians are attaining employment we maintain that good governance must be brought to public finances.

If in the absence of growth – the Government feels that there is justification to increase the public sector workforce  to clean up bush; sargassum seaweed and attend to drainage – then there should be: ‘an engaging agency,’  which is committed to following the Employment Rights Act and  that will ensure the payment of NATIONAL INSURANCE. But, public funds must not be used for an exclusive
political benefit.   

This is yet another example where the actions of the BLP has been costly to anyone but itself. When it restructured the national debt it eroded some $1.3b 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.

Despite their  argument in the Budget  that COVID cost the National Insurance Scheme  $150m, the BLP’s restructuring of the national debt has had an even more  deleterious impact.

It eroded a whole $1.3b.

The Government now seems to be introducing austerity in small doses. We wonder if this is the reason why it rushed to call a general election – a mere two -a-half-years after being elected.

We also wonder what further pain this BLP Administration has 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.

Erskine Branch is the Executive Assistant to leader of the Alliance Party for Progress (APP). This column was offered as a letter to the Editor.