The Finance (Miscellaneous Provisions) Bill 2020, which amends some 70 pieces of legislation so as to implement the measures set out in Budget 2020-2021, will put the economy of Mauritius back on track for recovery. The Minister of Finance, Economic Planning and Development, Dr Renganaden Padayachy, made this statement, yesterday, in the National Assembly during his summing up speech.
'According to recent local estimates, the implementation of the 2020-2021 Budget will enable Mauritius to achieve a positive growth rate of at least 7% in 2021', said the Minister. He maintained that this will be made possible only if certain conditions are respected, including the vote of the Bill.
Objectives of the Bill
The Bill will create the conditions for an economic recovery that will be sovereign, inclusive, sustainable and digital, the Minister pointed out. 'It will help preserve the jobs and livelihoods of the vulnerable and the social and environmental transition of Mauritius will also be accelerated while restarting the economic machinery,' he stated.
Another objective is to provide the framework for the implementation of Government's fiscal policies as announced in the 2020-2021 Budget. This will make our tax system fairer and more efficient, he said. To-date, tax revenue from income tax in Mauritius represents 1.98% of the country's GDP.
Taxation for individuals and businesses accounts for less than 5% of GDP in Mauritius, highlighted Dr Padayachy. In terms of recurrent Government expenditure, including social welfare, public service, environmental protection and housing, these account for nearly 30% of Mauritius's GDP. He pointed out that Government has not increased taxation or reviewed the welfare State.
Moreover, the Minister indicated that the third objective of the Finance Bill 2020 is to create the necessary conditions to preserve the social gains of Mauritians acquired over the years. In this regard, the introduction of the Contribution Sociale Généralisée (CSG) is a major step to ensure the sustainability of our social system, he said.
The Contribution Sociale Généralisée regime
According to Dr Padayachy, the CSG will meet the medium to long-term limits of the National Pensions Fund. 'The CSG Plan will apply to all employees and employers, and contributions will begin as at 1st September 2020. For people earning less than Rs 50,000 per month, the contribution will be 1.5% for employees and 3% for their employers', he said.
For those earning more than Rs 50,000 per month, the contribution will be 3% for employees and 6% for their employers. For all employees earning less than Rs 36,000 per year and for their employers, the contribution will be lower than how it was under the National Pensions Fund system.
Referring to Moody's, the Minister pointed out that the agency had just recently maintained Mauritius's positive rating. In his view, this decision reflects the capacity of the Mauritian economy to absorb international economic shocks. 'It underscores the quality and effectiveness of the country's institutions, good governance framework and macroeconomic policy as factors that have contributed to the performance of Mauritius,' he concluded.