The Bermuda Public Service Union boss Armell Thomas yesterday slammed Government for increasing payroll tax by two percent claiming it will be difficult on workers and businesses.

Mr. Thomas, BPSU President, also questioned why Government wasn't cutting back on spending.

Speaking at a press conference yesterday, he said: "We recognise that everyone has to tighten their belts, but it appears that Government is not tightening their belts, exampled by paying for consultants when those who are already being paid know what is required to do the job effectively.

"The BPSU finds it hard to swallow the two percent payroll tax increase proposed in the 2010/2011 Budget which would be quite hard on workers, i.e. and increase from 4.75 percent to 5.755 percent. The Union is an advocate for saving jobs, promoting jobs and it is concerned that employers will be discouraged and forced to close business because of the added tax.

"Why couldn't consideration be given to funding for an unemployment fund, whereby there could be a cap on funding for those who are unemployed but must show efforts to find a job within a certain time frame?"

Mr. Thomas also questioned why wasn't an increase in departure tax considered over payroll tax claiming travel for most Bermudians was a luxury unless it was for medical reasons.

He continued: "Why wasn't consideration given to making GEHI a full insurance company rather than creating FutureCare?

"The Union is also concerned about the proposal of tapping into pensions for persons who may be experiencing hardships. How will this impact on the future of the pension fund?"

Mr. Thomas suggested Bermudians should "swallow their pride" and do some of the necessary jobs that migrant workers do and he added he would like to see a plan from Government on how they will "stimulate the economy".

Last night Shadow Finance Minister Bob Richards said he agreed with some of Mr. Thomas's statements and said: "You can't expect to stimulate an economy by increasing taxes. The payroll tax increase is a tax on workers and businesses as well. This is the exact wrong thing to do when you want the economy to pick up."

However, Finance Minister Paula Cox said in many countries, jobs in the private sector have been cut and salaries slashed, but the Government has not done that here.

"No one likes tax increases so the public reaction is atypical, especially since for many years under this Government when tax increases were anticipated they did not come so people have gotten used to this. So the reaction is predictable.

"It would have been far more surprising if there was not a negative reaction. Though, I should note that there has also been a tremendous amount of support expressed and even though some have said to me their family budget is going to be affected they felt it was a fair and sensible budget. It is all a matter of perspective."

She continued: "However a healthy dose of realism would indicate that the Budget decisions taken were pragmatic, sensible and a realistic policy position as we position the country and her people to benefit from the eventual recovery. In the meantime efforts are made to continue to shield and protect those who are particularly vulnerable.

"We live in challenging times it is also a time of tremendous opportunity and a chance for even greater collaboration."