In the 2015 budget, Government measures aimed at strengthening the social safety net and improving the quality of life of low-income T&T citizens would have received most of the initial focus of attention. These measures include the increase by the Government in the minimum wage to $15 a hour, along with the $500 increase in pensions to low-income residents and public officers, the $300 hike in public assistance and disability grants and the new $500 grant to needy mothers.
But the budget also contained significant measures aimed at promoting long-term investment and home ownership by the middle-income earners in the country.
The budget increased the limit of contributions to registered annuities and other forms of pension from $30,000 to $50,000 a year. This measure, in effect, allows working people to reduce the amount of taxes they pay, while buttressing pension savings from the National Insurance Board and their workplace pension arrangements. The measure encourages the setting aside of more current income for future retirement and, as such, promotes habits of thrift and long-term financial planning.
In last Monday's presentation, Finance Minister Larry Howai, as well, announced the reintroduction of savings bonds, which would be tax-deductible up to $5,000 a year.
In the current context of commercial bank deposit rates of around 0.1 per cent, the introduction of a government-issued bond that is both low risk and paying a competitive interest rate will obviously be a boon to those pensioners and middle-income employees who have been caught between interest rates at historic lows and the dearth of low-risk investment opportunities.
Mr Howai also announced an increase in the personal allowance to resident individuals aged 60 and over to $72,000 a year from $60,000.Again, this measure will allow pensioners to retain more of their retirement funds and by doing so will facilitate an improvement in their standard of living.The budget also increased the first-time homeowners tax allowance from $18,000 a year to $25,000 a year, which will increase the amount of mortgage interest that can be deducted from gross income.
The minister also announced the extension of the two per cent mortgage programme by increasing qualifying property values from $625,000 to $850,000 and by increasing the combined monthly income of households from $8,000 to $10,000.Also in the budget was the supplementation of the two per cent mortgage with the introduction of a new 5.0 per cent mortgage programme for households with a combined monthly income of greater than $10,000 and less than $30,000.
This measure, which allows access to a mortgage between $850,000 and $1.2 million, focuses directly on middle-income families who have complained for years about being priced out of the home market.It was estimated by the minister that this measure will benefit 26,100 people.
The Government, generally, and Minister Howai, in particular, should be commended for introducing policies that will allow middle-income people to realise their dreams of home ownership and will assist an improvement in their standard of living now and in the future.
At the same time, the minister is encouraged to ensure that his plans for an Initial Public Offering of shares in Phoenix Park Gas Processors do not get derailed, as the divestment of state assets, more than anything else, boosts the wealth of T&T's middle-income citizens.