0

Treasury admits breaching 75% wage deduction limit

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to “curtail” civil servant salary deductions to no more than a combined 40 per cent of total income, after the Auditor-General rapped the Treasury for allowing the current 75 per cent limit to be breached.

The Auditor-General, in its report on the 2010-2011 fiscal year, said that in reviewing public officers’ loans, “a number of employees were allowed to have deductions that exceeded 75 per cent of their gross monthly salary”.

This, the report noted, breached the Treasury’s own internal policy that, from July 1, 2009, civil servants could have no more than 75 per cent of their salary assigned for debt servicing deductions.

“The net take home pat should in no way be allowed to fall below 25 per cent of gross salary,” the Treasury document said.

Admitting that it had failed to follow its own advice, the Treasurer confessed “that some employees’ payroll deductions exceed the threshold of the policy, [but] only in extenuating circumstances is this allowed”.

In mitigation, the Treasurer said an unspecified number of civil servants were already above the 75 per cent threshold when the 2009 policy was implemented, and “there has been very little change to this number thereafter”.

The Auditor-General’s report also noted that “a number of loans” did not start repayment in the month after they were granted, while the status of civil service salary advances was “not always reflected correctly”.

The revelations are likely to reignite a debate sparked recently, when it was revealed that some 70 per cent of civil service salaries - around $240 million - went on deductions to banks, insurance companies and credit union.

Fred Albury, the Bahamas Motor Dealers Association (BMDA) president, has added his voice to the earlier call by businessman Franklyn Wilson for the Government to remedy an unsustainable situation.

“One of the things I’d like government to look at,” said Mr Albury,” is that they have a situation where government employees want to buy a house or get a loan for a car, and some are so committed to furniture stores and the banks, 80-90 per cent of their wages are assigned to these institutions.

“The Government needs to look at curtailing that, and say no more than 40 per cent of your salary can be assigned. Put the risk on the banks if they lose money.”

Mr Albury said the high debt levels of many civil servants represented a barrier to fiscal reform, and the Government’s efforts to control growth of the public sector’s labour component, simply because of the impact any downsizing would have at the individual level.

“It’s fine and dandy their jobs are protected, but what about the private sector if we’ve got employees we need to release?” Mr Albury asked.

“The sacrifice is going to come from the private sector, not the public sector. They need to do things internally to bring the civil service in line with the private sector, so that if they have to cut heads, it doesn’t become an issue.”

Comments

Reality_Check 11 years, 1 month ago

Governments, both FNM and PLP alike, have allowed civil servant payroll deductions to soar as a means of buying votes and loyalty to their political party. Reducing either the percentage of such deductions or the needlessly high head count of government employees in many areas would now have serious financial consequences for financial institutions like Commonwealth Bank, Fidelity and Bank of The Bahamas. This is yet but another glaring illustration of how our politicians (from top to bottom) are senselessly running the Bahamas into the ground for the sake of their own political survival. Not a dam_n politician in this country today has an ounce of patriotism or caring concern for his fellow Bahamian!

The_Oracle 11 years ago

Yup, they were given a Rolls, they turned it into a Jitney!

That 15% cost of living increase is gonna pinch them also. Notwithstanding their "lowering" of Duty rates, if it ever happens, the administrative costs alone on the private sector will drive that. Then they'll adjust the Minimum wage up, driving inflation higher still.

Sign in to comment