By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Trade unions leaders "absolutely" plan to push for wage and benefit increases to offset the impact of a 60 percent VAT hike on Bahamians.

Bernard Evans, the National Congress of Trade Unions (NCTU) president, told Tribune Business that middle and lower income Bahamians were "getting the brunt" of a fiscal austerity strategy where they were constantly being asked "to do more with the same dollar".

Speaking prior to the Labour Day tragedy, Mr Evans said the government "cannot keep on taking and taking and taking" more from Bahamians in taxes in an environment of wage stagnation and minimal economic growth.

Warning that the increase in living costs, and reduction in disposable income and purchasing power, was continuing to shrink the middle class, the NCTU chief said the trade union was "very, very concerned and surprised" by the proposed 12 percent VAT rate.

"There was no kind of notification, and the effective date is a month away," Mr Evans told Tribune Business. "It's been proven very difficult to get salary increases, and at the same time they're going to levy additional taxes and we'll have to stretch that dollar further."

He revealed that the trade unions had a meeting with the Prime Minister scheduled for last Wednesday afternoon following the budget communication, with Dr Hubert Minnis informing them the government had decided to "stop avoiding the inevitable" and simply follow through with the VAT increase.

Pointing out that costs continued to increase without VAT, Mr Evans said the trade unions had no alternative but to seek wage increases or "some other benefit in kind", such as reduced utility bills, to offset the tax increase.

"Something has to give," he told Tribune Business. "They can't keep taking and taking and taking. It's really the middle class that carries the economy and is the bedrock of the economy.

"They send their children to private school, hire maids and gardeners, but every year that gets less and less."

Mr Evans suggested that The Bahamas appeared to be headed in the same direction as other Caribbean countries, where most of the population was low income and very few were wealthy, with nothing in between.

"We are very concerned that the middle class framework appears to be getting worse and worse," he told Tribune Business. "I think that right now we are all operating on a shoestring budget with everything increasing around us.

"We're trying to make ends meet as best we can, and this doesn't help. Taking VAT off breadbasket items and then increasing the rate on other things, it seems they're taking with one hand but giving with the other and we're still paying.

"They keep asking us to do more with a dollar, but that dollar is not increasing and, in some cases, they're letting people go. The lower income and middle class seem to be getting the brunt of it."