Government MP insisted on Friday.

Delaey Robinson spoke out after Shadow Finance Minister Grant Gibbons said changes to the Payroll Tax could have the effect of businesses keeping employees in low-paid jobs to maximise breaks on the tax.

And Dr. Gibbons warned that the changes could mean employers keeping salaries low to capitalise on credits on payroll tax bills.

But Dr. Gibbons said that in the US, rather than keeping two employees on where one could do the work, a job went -- but he stressed that retraining was vital to avoid unemployment and social problems.

And he added that -- rather than "feather-bedding'' employees in low-paid jobs, they should be given the opportunity to improve their skills and earning power.

But Mr. Robinson said: "I believe that the Government is already doing what the Honourable Member mentioned -- retrain and encourage people to improve their skills and go up.

"But at the same time, the marginal employee needs to be employed as opposed to becoming unemployed, by the suggested scheme of employing one person where we had employed two.

"That's not a terribly positive way to go, I would submit, which is why a Labour Government wouldn't be keen to go in that direction.

"We want to employ the marginal person, while at the same time getting on with training.'' Cox defends payroll tax changes wrong direction from where Bermuda wants to go. We want business to be more efficient.

"It's an incentive towards less efficiency basically, so I'm not sure it's the direction we want to be going in here.'' And he insisted -- rather than keeping people on in hotels or retail on low rates of pay -- they should be encouraged to train for sunrise sectors of the economy.'' The MPs clashed as MPs debated amendments to the payroll tax and the payroll tax rates structure.

Finance Minister Eugene Cox said that a $2,400 credit on payroll tax for workers in larger businesses -- with payrolls over $200,000 a year -- would protect those in the most vulnerable jobs, like retail and hotels.

And he added a notional payroll tax payment figure of around $70,000 per employee for international businesses would also end, with firms having to pay the real rate, but only up to a ceiling of $250,000, which is in line with international thinking on ending special tax breaks to encourage offshore business.

But Dr. Gibbons insisted that a cap for international business bosses still looked like a perk -- and called for the $250,000 ceiling to be extended to Island firms as well as to provide a level playing field.

He added that he had calculated that breaks on tax worked out best on low salaries -- although the real gain to firms was small.

Dr. Gibbons said at $20,000 a year, just $92 would be saved, with that figure falling to $42 on a $30,000 a year salary.

He added that -- after hitting a $38,400-a-year benchmark, employers got no gain from the new deal.

Dr. Gibbons said: "The real incentive is to keep your employees at below $38,400.

"In a sense, what the Honourable Member is doing is creating a ceiling, he's not creating a glass ceiling, he's creating a Cox ceiling.'' And he warned: "When you start to tinker with things, you've got to think them all the way through. He is creating a ceiling where people will be reluctant to increase people's salaries.'' He added that the incentives were also too low -- and said a $10,000 or $12,000 credit on payroll tax would be more of an incentive to employers.

Dr. Gibbons also challenged Mr. Cox to promise the $2,400 credit would not be taken away next year -- which would mean $100 extra in tax on $20,00-a-year and $150 extra on $30,000-a-year.

He added that the changes would also shift a greater tax burden on to the Island's international businesses -- where salaries are generally higher.

Dr. Gibbons said: "Maybe that's what the Minister intended -- but if that's what he intended, he should say so.

"I suspect this is going to have a knock-on effect for international business and I suspect it's going to have a knock on effect in terms of the community.'' Dr. Gibbons added that Bermuda should also charge "pro rata'' tax on people who work part of the time in Bermuda and part overseas, as is done in other countries, to minimise the effect of tax increases on the offshore sector.

But Mr. Cox said that Dr. Gibbons was indulging in "scaremongering'' and insisted his figures showed that $60,000-a-year was the zero-benefit for employers under the changes.