By Admin. Updated 2:42 p.m., Thursday, September 22, 2022, Atlantic Standard Time (GMT-4).
Persons employed with the Government of Saint Vincent and the Grenadines will receive a salary increase of 7 percent over the next three years – 2023, 2024, and 2025 as the economy is projected to improve.
The workers’ unions made the announcement recently, but the official announcement was made today (September 22) at a press conference by Finance Minister – Camillo Gonsalves.
Mr. Gonsalves also announced the government’s plans to decrease personal and corporate income taxes and the income tax threshold.
Three-year salary increase
On the salary increases, the finance minister said the planned increases will begin with a 2.5 percent increase in 2023, a 2 percent increase in 2024, and a 2.5 percent increase in 2025.
He said that in the 2022 budget speech, the government, monitoring the country’s projected economic recovery, had announced plans to have talks about salaries and wages and income taxes.
He said the workers’ unions were invited to have discussions in August 2022.
In September 2022, the unions agreed to the 7 percent proposal.
The last three-year increase was a tok two of 4 percent paid for 2018, 2019, and 2020.
Income tax and tax threshold reductions
Mr. Gonsalves also announced a decrease in income taxes and the income tax threshold.
“We have decided to reduce taxes from 30 percent to 28 percent,” he said.
“We’ve reduced those taxes to 28 percent on everybody who pays personal income taxes, and we are reducing those taxes simultaneously on corporate income tax,” Mr. Gonsalves said.
This means that both public sector and private sector workers who pay personal income taxes will benefit from the reduction.
Mr. Gonsalves said that when the Unity Labour Party – ULP administration took office in 2001, the income tax rate was at 40 percent, but it was reduced to 32.5. He said when he became finance minister in 2018, there was another reduction to 30 percent.
The finance minister also indicated that the income tax rate could fall further in the future, based on the condition of the economy.
“The long-standing position of the government is that we want to bring our income tax rate down into the mid-20’s,” he said.
“I hope as things improve, we can revisit it again in a couple years,” he added.
Additionally, the income tax threshold is also being changed to benefit workers.
The finance minister said: “at the other end, your tax threshold which is how much money you make that is tax free, before the government starts taxing you is going from $20,000 to $22,000. So, before, if you make $19,000, you didn’t pay income tax. Once you cross $20,000, they started to tax any money over $20,000.”
“Now, the threshold is going up to $22,000,” he added.
Mr. Gonsalves said this threshold was at $12,000 when the ULP took office in 2001.
He said the moving of the threshold, “will mean that many many workers in Saint Vincent and the Grenadines will not pay income tax because their salary is below $1,800 per month.”
“So if you make under $1,800 per month, you’re not going to pay income tax with this increase,” he added.
The tax relief package will take effect next year – 2023.
He said: “The tax relief package is very important when considering exactly how much more money somebody is going to take home in their pocket”.
“It’s not just that your salary is going up, it’s that your taxes are going down. So, you’re going to save a little money when your taxes go down, and you’re going to make a little money when your salaries go up,” he said.
When said when you add those two things together, you’re ending up beyond 2.5 percent, referring to the planned increase for 2023.
He said the salary increases combined with the income tax reductions will amount to a 4 percent increase in take home pay for some workers.