David Burt emphasises fairness in pushing through changes to social insurance
Changes to the social insurance system will see people on $18 an hour get an extra $720 a year, David Burt said yesterday.
Bermuda is an “outlier” when it comes to the safety net system and contributions need to be transformed into a sliding-scale model, along British lines, the Premier said.
The move, announced in the Throne Speech, will see amendments to the Contributory Pensions Act 1970 so that payments in are “based on salary earned and not a uniform contribution irrespective of income”.
The Premier insisted this would make the system fairer.
Mr Burt said at a press conference on the Throne Speech: “I would say that the social insurance changes are similar to the social insurance changes from... in the United Kingdom which were made many, many years ago.
“Every social insurance system around the world that was set up under the UK model had the same contributions for everyone regardless of however much they made.
“But, in the United Kingdom, I think that was changes in the 1970s or 1980s; Canada was changed a long time ago. It’s just that Bermuda is this outlier.
“The effect of this change would be to increase the take-home pay of low-wage earners while having high-wage earners pay more into the fund. Changes resulting from this work will be revenue accretive to the CPF, which will help to address the underfunded nature of the pension plans.”
Mr Burt, who is also finance minister, added: “The cashier making $40,000 a year at a local store is paying the exact same amount as a person making $400,000 who owns the store.
“That doesn’t happen anywhere else in the world.”
Referring a person earning $18 an hour, the Premier said: “A person on a scale, where they are paying as a percentage of their income, versus a fixed rate, will see their take-home pay increase by $720 a year.”
The Premier said the changes would be put before Parliament in the new session.
He said: “This is certainly not something that can be rushed. What we are taking about is a percentage of income for social insurance.
“Bermuda is just one of the few countries that are left that never changed their initial social insurance system from one that is a fixed rate to contribution to one that is a percentage of income.”
Mr Burt also said a review of the sugar tax set-up would happen in this parliamentary session.
He said: “There was another step promised in September that the Ministry of Finance will deliver in this legislative session — that was a promised review of the sugar tax.
“The Government is reviewing the application of the sugar tax with a view to reducing the goods that are subject to the sugar tax.
“In our discussions with importers and retailers, there was a discussion about the wide range of products that the sugar tax is now applicable to, and the Ministry of Finance is working with the Ministry of Health to narrow the application of the sugar tax to provide additional relief, while not going against the main purpose of the sugar tax — to reduce the consumption of sugary items to enable long-term benefits for healthcare, as we know we have severe issues of chronic disease in Bermuda, specifically those of diabetes.”