As published on barbados.loopnews.com, Wednesday 31 August, 2022.
Economist and former government minister, Marsha Caddle is contending that the wealthy should pay more to the National Insurance Scheme (NIS).
Caddle made the assertion last week during the League of Young Socialists Annual General Meeting while proposing several measures to reform the 'public purse' in these pre-crisis times.
The parliamentary representative for St Michael South Central held that "a more progressive NIS" should equate to "higher levels of contributions from the wealthy with no increase in benefit".
"I stand by it. I don't know if it is a recommendation that the Government will take but I think that the NIS contribution system has to start to more closely align with our progressive tax system," Caddle insisted while noting that the category of the wealthy should be clearly defined.
"When we set these thresholds for higher contributions too low, then we have an issue with a middle class that is vulnerable and is about to become poor."
Her comments come on the heels of revelations that the NIS Fund could be exhausted within the next 20 years, especially as it pertains to pensions, should Government fail to take action sooner rather than later.
The reputable economist maintained that the NIS' downfall was not due to poor investment but was caused by a dilapidated social insurance framework that was gradually collapsing in Barbados and across the world.
"The problems that NIS has today are not an investment problem. The returns on NIS investment have been high and the rate of return versus the risk of the investments is sound.
"The problem the NIS has today is the problem every social insurance scheme is set up in this way has all over the world, which is we have an increased life expectancy and a declining population," Caddle noted.
The Barbados Labour Party (BLP) politician listed compliance as the first issue that should be tackled to reform the NIS as she referred to companies that collect contributions and do not pay them on behalf of their employees or which do not deduct NIS.
"When I talk compliance I think that we know that there are large companies and companies that do well, that either collect NIS contributions and don't pay them in or don't collect them, and I think we have to start there, with these compliance issues."
Caddle also maintained there should be flexibility in NIS payments for self-employed and standard employees.
"It was clear to us during COVID that the NIS has to align the benefits that people get who are employed by firms and the benefits self-employed people get. They have to be aligned and they have to be the same.
"I think if we are going to have a reform of the NIS there has to be perfect alignment between a standard employee benefit and self-employed benefit. There also has to be flexibility in the timing that the self-employed are able to make their contributions.
"There has to be flexibility in allowing contributions to be paid in a way that does not destabilise the certainty of the Fund itself but allows people to have that flexibility based on how they receive income," she insisted.
The economist emphasised that the NIS needs to stay abreast of its audit and "create value" for its customers by increasing its efficiency and speed in payments. She pointed out that some countries in the Eastern Caribbean pay their benefits to citizens within 48 hours and contended that the NIS in Barbados should be on the same playing field.
"Our NIS has to get there because I do not think we can propose to the people of Barbados some of these reforms...if we do not also show how we are also increasing efficiency, cutting the [wait] time of benefit payments. People need benefits today," Caddle stressed.
The St Michael South Central representative also suggested that the disability or invalidity benefit for those declared unfit to work be re-examined, especially the definition of a disability. She shared a case where a constituent with low functioning autism was told that they needed to be blind or deaf to qualify for disability benefits.
"It seems to me that there are cases where people are able to do other kinds of work and that in fact, they can continue to contribute and work, just not the kind of work or field from which they medically retired.
"There are others I feel with disabilities that can never work and those people and their carers who need additional support are left out, so I think there are some right-sizing needs to be done there even in terms of the definition of disability in the National Insurance Scheme," she said.