Wallets are a little bit lighter this week as a result of increases in the NIB payroll tax of up to 25 percent.
There is no doubt many people receive financial help from the National Insurance Board that might otherwise be forced to do without, and that’s fair enough if that’s why the NIB was created.
But according to the NIB’s web site:
"Its primary mission was and is to provide income-replacement in respect of sickness, invalidity, maternity, retirement, death, industrial injury/disease, and involuntary loss of income."
Obviously this is paid from the money taken from workers themselves in the first place.
As the political class began to see the votes they might get if they appear to be concerned about the less fortunate, the mission changed as the NIB confirms.
They tells us that:
"NIB’s added mission in the administration of the country’s social security programme, is to provide assistance for needy citizens and to assist with the social and infrastructural development of the country." (emphasis added)
And so as the potential political payoff clouds the original intent of NIB even more, Bahamian’s will have to be taxed more and more if they are to ever receive the retirement benefits they were forced to "contribute".
What is just as distasteful is the law forces employers to deduct the NIB tax from the pay packet of employees before they receive it, and then the government spends the funds on buildings or new programmes and bureaucracies that will inevitably deplete the fund as their own actuarial studies report.
There is a better way.
The NIB should be converted from a pay as you go system and the funds contributed (in this case it would be a contribution and not a tax) are kept in an account earmarked for each individual that pays NIB, and if a contributor does not want to utilise the government programme, they should have every right to join the private pension plan of their choice.
With regard to help for the poor, find ways to encourage people to donate to private charities.
One possibility is to allow property owners to pay reduced property taxes if they contribute the funds to charitable causes. For example; if the annual property tax rate is $1,000 the property owner might be allowed to donate $600 to a private charity in lieu of paying any property tax.
These are not the only potential solutions to helping the poor and protecting individuals retirement funds, but there must be a better way than following the failed "government social safety nets" around the world.
