Economist Crystal Drakes has identified what she says is a cash-poor, debt-ridden middle class in Barbados.
She contended on Wednesday that many of those perceived to be in that economic group have found themselves depending on personal loans and credit to meet their needs, while also having to pay their mortgages, car loans and other financial obligations.
The Independent Senator made the observation as she contributed to debate in the Upper House on the Pandemic Contribution Levy Bill, 2022.
Under the legislation, public and private sector employees with salaries of $6 250 or more per month are required to pay one per cent of their earnings in the Pandemic Contribution Levy, for a one-year period.
However, Senator Drakes was curious about how Government had arrived at that threshold and questioned whether it would have been more appropriate to target persons making $10 000 per month.
“That is a significantly different income bracket than a person making $6 250. And, Sir, this is based on the premise that in Barbados, like most other societies, the top earners own a large share of the income of their country,” she contended.
“Sir, there is a research paper titled A Community Divided: Top Incomes in CARICOM Member States. As of 2015, the average household income of the richest 10 per cent in Barbados was three times that of the general population.
“When we look at it from the top one per cent earners, it is even more glaring in terms of disparity. The average income household of Barbados’ richest one per cent had ten times the income of the average household. And that is why I ask how did the Government arrive at the threshold of $6 250?”
The Independent Senator added that it was strange the Mia Mottley administration had targeted the top earners in the business community to pay Pandemic Contribution Levy, but not the high-income earners.
Telecommunications companies, life and general insurance companies, businesses engaged in the sale of fuel, and commercial banks with a net income of $5 million or more in financial years 2020, or 2021, or both, are subject to a levy of 15 per cent of their net income.
Senator Drakes said she was trying to rationalise whether the Government was attempting to earn revenue from top earners but was roping in persons in the middle class who should not have to contribute to the levy. (AH)
