Shadow Finance Minister suggests payroll tax on net pay, not gross
Government’s tax cuts are not making enough of a difference to those who need it.
This from Shadow Finance Minister Dr Douglas De Couto, who says the OBA recommends more targeted cuts.
He cites the Belco fuel tax cut which, by his calculations, would favour the wealthy.
“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… 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?”
Dr De Couto also highlights that the OBA was first to introduce a progressive payroll tax structure, where high earners pay a progressively higher rate.
However, he suggests Government changes the payroll tax system to be based on net pay rather than gross pay, citing rising health insurance costs, so that payroll only comes out of “the money that actually ends up in your pocket at the end of the week or month”.
Finally, the Shadow Finance Minister recommends regularly revising payroll tax bands to reflect the cost of living, so that any pay increases don’t necessarily put earners into a more expensive tax bracket.
“These are changes that could have real impact on the cost of living for all Bermudians”, Dr De Couto says, “and we hope that the Government gives them serious consideration.”
We have reached out to the government for comment.
