By Vernon Daley, Staff ReporterWORKERS AND employers will soon have to fork out increased contributions to the National Insurance Scheme (NIS) fund.
During yesterday's sitting of the Standing Finance Committee, it emerged that the Government would be raising the $250,000 ceiling on which NIS contributions are calculated to provide money for the soon-to-be established National Health Fund (NHF).
This, however, drew sharp criticism from the Opposition Jamaica Labour Party (JLP) which argued that the move amounted to an imposition of additional taxes on the already overtaxed population.
Facing questions as the committee continued examination of the 2003-04 Budget Estimates, Labour and Social Security Minister Horace Dalley fended off Opposition pressure and said he would give details of the adjustments when he speaks in the Sectoral Debate which follows the main Budget Debate.
Currently, an employee's NIS contribution is calculated at 5 per cent up to the first $250,000 of his salary. This is split equally between the worker and his employer.
Since early last year there has been talk that the Government was looking at raising the ceiling on NIS contribution, which was last increased in 1996. However, this did not materialise.
The Government plans to use $800 million from the increased NIS intake to finance the National Health Fund which will be set up later this month. The $2.2 billion Health Fund which will cater to Jamaicans suffering from 14 specified chronic illnesses, will also receive $400 million from the Consolidated Fund as well as a $1 billion contribution from a 23 per cent tax that was imposed on tobacco products.
Yesterday, Minister Dalley said the increased NIS intake would also be used to top up benefits to the 77,000 NIS pensioners, retroactive to April 1, 2003. He added that there would also be a special health plan for pensioners this year.
Opposition Jamaica Labour Party MP Dr. Ken Baugh, however, contended the Government should have looked to using money from the NIS investments to fund its new initiatives rather than raise the wage ceiling for contributions.
"This is in fact additional taxation on people who are already stressed," Dr. Baugh said.
During the last financial year, the NIS realised a 17 per cent increase (3.5 billion) on its $20 billion investment.
Minister Dalley argued that it would be unwise to take money from the investments to carry out the programmes because of the need to ensure predictable benefits for pensioners over the long term.
"We felt that to have your money secured to take care of that down the road is solid planning," he said.
