The public service minimum salary has been raised to $50,000 per month, representing a more than 25 percent increase.
Delivering the caretaker budget for the rest of 2015 on Monday, Finance Minister Winston Jordan said it represented a 26.4 percent increase on the previous base salary of $39,540 and a 17 percent increase for more than 4,000 workers earning the minimum wage of $42,703. Payouts will be retroactive to July 1, 2015.
“Effective July 1, 2015 all other public servants will receive a 5 percent salary increase plus an additional $5,000 monthly. This, Mr. Speaker will allow for a greater increase in the lower income brackets. For example, a worker currendy earning $50,000 will have a monthly increase of $7,500, or 15 percent; a person currently receiving a salary of $100,000 would get a 10 percent increase.
Since the bulk of the public servants earn $100,000 and below, these are substantial increases, more than was promised to these categories of workers,” Jordan told the National Assembly
Only workers who were employed on or before January 1, 2015 will benefit from the increases.
Salary increase for public servants was one of the coalition government’s campaign promises which was incorporated into its plans for its first 100 days in office. Increased government pensions was also on the 100 Days list and Jordan announced that pensioners will now receive $17,000 monthly, up from $13,125.
The government also made good on a promise to assist small miners.
“I am pleased to announce that eligible gold miners will be exempted from the payment of custom duties on fuel, matting, ATVs, jack hammer drills, flex hoses, expanding metals, pumps, pump housing, impellers, shaft and engines,” the minister said.
No reduction in VAT
But significantly there will be no reduction of the 16 percent VAT rate, something that had been a mainstay of the election campaign rhetoric and the 100 Days Plan. According to Jordan, the new government was blindsided by the state of the tax system when it assumed office, with high tax rates and concessions and exemptions amounting to some $55B last year.
This was coupled with “unacceptable levels of tax evasion,” misuse of discretions to reward friends and low or no compliance.
“In short, Mr. Speaker, the system is broken and we must fix it in a comprehensive manner – one that’s in a transparent and predictable tax system that rewards effort, promotes investment, improves our national competitiveness, and removes distortions between and across sectors.
It is for these reasons that we have delayed the phased reduction in the VAT, as we put in place a Tax Reform Committee to undertake a detailed assessment of the tax system. Since major work has been completed in this area recently, we expect the Committee to complete its work by the end of the year.”
But all is not lost on that front since ketchup will be VAT free as well as other foods such as yogurt, cereals, fresh carrots, mustard and mayonnaise, locally-produced fruit juice, locally-made chowmein and a gaggle of other items.
The finance minister estimates that the government will lose some $680M in revenue by zero-rating those items.