Payroll tax rollback won't put more cash in your pocket

This is on page seven of the ­February 2011 Budget ­statement. 

Forty days ­later, with financial year 2011/ 2012 just one day old, that statement is already untrue. A perfect example of the left hand not knowing what the righ is doing.

The Finance Minister — the right hand — promises to “return approximately $50 million”.

The Health Minister — the left hand — raises premiums for ­Government’s HIP insurance by 28.8 per cent, or $86.07 per month, rising from $298.93 to a new high of $385.

The chart shows this right/left financial operation results in an overall loss of income to the ­employee — the taxpayer.

Loss

For anyone earning less than $1,600 per week — $83,200 per year or $40 per hour — the combination of payroll tax ­rollback and health premium ­increases will be a pay reduction, of anything from one tenth of one per cent to a full two per cent.

In this combination, tax plus HIP premium adjustment, lower paid people suffer the bigger loss of income.

Except for the ‘uber’ paid — people such as Cabinet Ministers on $140,000 per year — no individual employees will receive any real income benefit from those “payroll tax reductions”. 

The promised $50 million will materialize — but not as “spending power to taxpayers”.

A big chunk of it is immediately sucked back, disappearing into Government’s still-widening money hole. What does not disappear into this hole will go into the cash registers of the major health insurance providers.

Unless employers surrender all of their 1.5 per cent payroll tax rollback, none of that $50 million payroll tax rollback will reach the ordinary citizen taxpayer.

But about $10 million — or 20 per cent of that promised $50 ­million — might get into the hands of a few non-insurance businesses and larger employers.

The health premium rise should have been foreseen. It should have been apparent 40 days ago.

The February Budget statement promise — made in writing — should not have been made at all.

Didn’t the two ministers, who sit at the same Cabinet table, talk to each other?

Or is this debt-ridden, overspending Ministry of Finance so dysfunctional that it can promulgate that Budget statement ­containing that written promise on February 18 then preside over a process in which — 40 days later — rising health insurance premiums grab back at least 80 per cent of that promised $50 million payroll tax rollback. 

Promise made. The Lord giveth. Promise immediately unmade. The Lord taketh away.

Flock

It is as if the Finance Minister was a Moses, telling the faithful they will receive 30 pieces of silver in payroll tax reductions.

The flock then wanders through the verbiage of 40 days of parliamentary Budget debate before standing on the shore and seeing into the promised land of a new financial year.

Then Moses and the high priests grab back the 30 pieces of silver — demanding and getting one or two more in addition — ­before pushing, not leading, their faithful flock across the beautiful turquoise river into the promised land of financial year 2011/12.

Examine the numbers. Re-read the opening quotation. Ask yourself, what in heck is going on? Then, answer the question.

Like me, you’ll probably get the same answer. That nobody knows what is happening. Not the ­Ministry of Finance, not the ­Cabinet, not the parliamentary majority party. Nobody. In best Bermudian: “Nobody knows nuffin’.”

Ultimate proof will be in the first pay cheque you pick up in April 2011. Measure your promised slice of that $50 million.