Government backbencher Wayne Perinchief yesterday said a payroll tax increase unfairly punishes blue collar workers already feeling the pinch from the economic crisis.

And both opposition parties complained workers are now being penalised for Government's overspending before the downturn started impacting Bermuda.

Finance Minister Paula Cox, who announced payroll tax would jump two percentage points to 16 percent in yesterday's Budget, described the financial turmoil as a once-in-a-century event no one could have predicted.

But her shadow counterpart Bob Richards, who warned the crisis was on the way three years ago and was dismissed as a scaremonger, reacted yesterday: "My name must be 'No One'."

Mr. Richards said the Budget imposes a total $77 million in payroll tax increases. Michael Fahy, from Bermuda Democratic Alliance, said: "I think it's a disaster. When you look at what this is going to mean for small businesses, it's not helpful."

After yesterday's Budget presentation, Mr. Perinchief pointed to the wage freeze recently agreed by hotel workers in the light of struggling occupancy figures.

"People should be concerned because already we are seeing the collateral effects with the freeze on wages for blue collar workers," the Progressive Labour Party MP told The Royal Gazette .

"Now there's an extra two percent on top of that in payroll tax which affects the middle class and blue collar workers. They are carrying the brunt of supporting infrastructure and the budget. This to me is anomalous and unfair.

"As a labour politician I believe we should lift the debt burden and extend it to larger companies that are here."

Mr. Perinchief said tourism is on the decline and yet its workers are being asked to absorb the shortfall in revenue.

He continued: "And yet the very other pillar [international business], which is strong, receives no increase except that which they pick up across the board.

"I think we should actually not consider big corporate business to be the holy grail; and they should be treated just like the rest of the corporate community in this Country, and pay a commensurate increase."

He said he did not believe the Budget was harsh overall, but said he was concerned about the debt ceiling being raised 25 percent to $1.25 billion.

"That portends that there's an intention to raise debt," he said.

Mr. Richards said: "While Ms Cox preaches austerity for the people, she increases Government spending by nine percent. In other words, she wants Bermudians to buckle down and foot the bill for Government while her colleagues carry on without restraint.

"This failure to tighten Government's belt carries over from past years. Despite ordering a ten percent cut in Government spending last year, she and her colleagues spent $56 million net of revenues more than planned.

"Ms Cox's Budget says this Government will not change its ways. The Minister is taking people for granted and is content to tell them, 'Do as I say, not as I do.'

"We think people should step forward and say this not acceptable, enough is enough."

And Mr. Richards predicted the worst is still not over, saying: "I don't believe we have stopped contracting. If you believe as I believe, the worst thing you can do is have a tax increase. This is the opposite of a stimulus package."

BDA MP Shawn Crockwell said: "We are disappointed that Government did not take a more proactive stand in tightening its belt and accepting responsibility for where we are in the economy, and trying to reduce the budget of various Ministries rather than transferring the burden to the taxpayer.

"We feel that over the last five years Government has mismanaged the economy. They didn't prepare for the recession; they could have saved and been in a much better position to cope. Instead, they squandered resources, overspending on capital projects.

"We saw the signs two or three years ago. They said the Official Opposition was scaremongering, but there were signs the economy was going to deteriorate. All the economists were predicting, they didn't know exactly when, but they knew it was coming.

"They are somewhat to blame, but the taxpayer is shouldering the burden. We don't think that's fair. BDA would have been less critical if they did a bit of both — reducing the budgets and slightly raising taxes."