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Hidden in Friday's Budget Statement are some of the reasons you must pay more payroll tax and higher fees, along with evidence of where Government spending is not sensibly managed.

Essentially, Government makes managerial mistakes but does not correct them. Government just goes on repeating its mistakes. I'll show you one primary mistake and what it has cost you - so far.

The Post Office - government's version of FEDEX or UPS. It is a commercial service and in the past, the Post Office had made either a small profit or small loss - usually less than a $1m difference.

The last time the Post Office made a profit was in 1997 - $38,000.

In this Budget, the Post Office will receive $15,142,000 to pay for its operations. The Post Office projects revenue of $7,255,000 from providing those services.

That means that the Post Office will LOSE $7,887,000. (In 2004, the loss was $2,976,439.) In this coming year, it is planned that the Post Office will actually LOSE money and will spend 67c to deliver each 35c letter.

With the rise of the Internet, email, cellphones, and so on..., throughout the developed world, all Post Offices are delivering fewer services than a decade ago - hence the nickname 'Snail Mail'.

If you review your personal 'snail mail', you'll discover that a lot consists of unsolicited and expensively produced Government brochures and handouts.

Throughout the developed world, all Post Offices have been reducing administrative costs. But not in Bermuda! Between 2004 and 2010, operating the way it has, the Post Office lost the accumulated total of $40,242,000. This year's planned loss will take that total to $48,129,000.

This accumulated loss of $48m is not made up by revenue earned elsewhere in government. Instead, it is part of the "big borrow" that created today's $830,000,000 national debt.

For the Post Office, operating at break-even would help cut the cost of government. Cutting costs means reducing the need for taxes. This lowers the cost of living. If the cost of living reduces, everybody will have more disposable income and will either save more or spend more - and this will help push the economy out of recession.

That's part of what's really going on. And there's more....

You will feel the first impact of that well-disguised 21 per cent increase in payroll tax on April 9. By the end of April, a second increase will kick in because hospital costs and thus health insurance rates will go up in April.

Worse off

In August, a third increase as Social Insurance contributions rise. By Friday, September 1, all the increases will be in place. The total increase will be more than the added 1 per cent. It will be almost 2 per cent.

By September 1, a typical supermarket cashier will be worse off by $2 in every $100 (two per cent). If he/she is taking home $585 a week today, that worker will find himself/herself only taking home $575 a week by September 1. That's $10 less per week.

It does not end there.

That person's employer will find that by September 1, because of the 10.25 per cent tax paid by employers, it will cost the employer an additional $10.04 per week to keep that person on staff. The employee gets $10 less. The employer pays out $10 more. Both numbers go the wrong way. Some employers will be forced to cut staff.

If the supermarket agrees that their cashiers will not take a hit in pay, the supermarket will have to give their cashiers a 1.6 per cent pay increase. If they give that pay increase, the supermarket - as employer - will find its payroll costs rising by 2.6 per cent (to $23.02 per cashier). That 2.6 per cent rise in payroll costs cannot be absorbed. It has to be passed on. Joining up with the increased Foreign Currency Purchase Tax (FCPT), that cost will appear on food shelves.

Impelled by this Budget, Bermuda's economy will suffer a wave of cost increases. Workers will try to stay where they were before this ghastly Budget was imposed on them. Employers/businesses will fight to survive in a cut-throat business world. This payroll tax increase will help cause job losses.

This is a bad Budget. It has taken exactly the wrong measures at the wrong time. These tax increases are imposed primarily because of 'sins of the past'.

From Eugene Cox's $160m in February 2004 to Paula Cox's $830m in February 2010, this five-fold (500 per cent) growth in National Debt reveals those financial sins of the past.

People have been saying that national debt has to be paid off by our children. That's not true! You will start paying on April 9 and you will never stop, and, your children will still pay.

This is a bad Budget put together by a bad financial manager who is part of a bad Cabinet group.

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