Following a meeting with unions here in St. Vincent and the Grenadines, the Government has announced a seven percent salary increase for employees of the Government over the course of three years.
Minister of Finance Camillo Gonsalves held a press conference on Thursday, where he made the official announcement and provided the details of the new wage package.
Minister Gonsalves said negotiations took place between a team from the unions and a team from the Ministry of Finance.
“In 2023 there will be a salary increase of 2.5 percent, in 2024 there will be an additional salary increase of 2 percent, and in 2025, there will be an additional salary increase two and a half percent. Making in total, seven percentage points over a three year period,” he said.
Minister Gonsalves noted that the last salary increase that was negotiated in 2018 amounted to four and a half percent over a period of three years.
Also announced at the press conference was a tax relief package. A reduction in taxes from 30% to 28% announced by the Finance Minister, who said this reduction applies to anyone paying income tax, as well as corporate income tax.
“We’ve reduced those taxes to twenty eight percent on everybody who pays personal income tax, and we are reducing those taxes simultaneously on corporate income tax. So the tax rate now moves from thirty to twenty eight percent.” Gonsalves said.
He noted back in 2018, a similar move was made, where salaries were increased and taxes reduced, from 32 percent to 30 percent.
Minister Gonsalves said the longstanding position of the Government is to have the income tax rate brought down into the mid-20s.
However the announcements did not end there, as the Minister of Finance went on to discuss the increase of the tax threshold from $20,000 to $22,000, a change that will see many Vincentians not have to pay income tax.
“That threshold is going up to $22,000, when we came to office that number was $12,000. So we’re going from $12,000 when we came to office to $22,000 now, as an income tax threshold, and that will mean that many, many workers in St. Vincent and the Grenadines will not pay income tax because their salary is below $1,800 a month,” Gonsalves said.
The St Vincent and the Grenadines Teachers’ Union, the Public Sector Union, and the Police Welfare Association in a press conference of their own expressed satisfaction at the conclusion of the negotiations.
The combined cost of the tax relief and wage salary increases is expected to cost the Government $60 million in revenue.