Budget 2020-2021 lays emphasis on a more equitable distribution of wealth, said the Minister of Finance, Economic Planning and Development, Dr Renganaden Padayachy, on Tuesday, at the National Assembly, during his speech at the closing of the parliamentary debates.
He highlighted that the focus is on preparing for the post-Covid-19 period without sacrificing public finances while promoting social justice, economic prosperity and sustainable development.
To that end, he pointed out that the government has directly assisted more than 460,000 individuals through the implementation of measures such as the Wage Assistance Scheme for employees earning up to Rs 50,000, and the Self-Employed Assistance Scheme, relieving the self-employed and the informal sector. In addition, the Bank of Mauritius Support Programme and the Business Support Plan have been instrumental in assisting firms in difficulty, he said.
The Finance Minister also stated that the Solidarity Levy introduced in the Budget will have a maximum rate of 25% only and will concern only 0.2% of the population.”99.8% of the population will not be affected, as this measure will impact on only 3,000 high net worth persons. it is an appeal to them to participate in solidarity and help reduce inequality.”
Strategic thrusts for a robust recovery of investment and the economy
Referring to the main strategic thrusts of the Budget 2020-2021, Dr Padayachy insisted that the Plan for the Relaunch of Investment and the Economy has a short-term objective of safeguarding employment and the economic fabric coupled with a long-term strategic investment objective.
The main measures of this recovery plan are:
– Injection of Rs 100 billion to the Investment and Economic Recovery Plan which will help revive the traditional sectors of the economy, and facilitate the emergence of new areas of activity.
– Construction of 12,000 social housing units over the next three years.
– Investment of more than Rs 40 billion in major infrastructure projects including the development of new community spaces, the construction of dams, roads and bridges, the development of port infrastructure, and the completion of the metro on the Rose Hill-Curepipe segment.
– Establishment of the Mauritius Investment Corporation to support viable Mauritian enterprises in difficulty, to promote food and pharmaceutical production for self-sufficiency, and to invest in projects of strategic importance to the country.
– Provision of Rs 20 billion to support small and medium enterprises and vulnerable households.
– Provision of Rs 10 billion by the Development Bank of Mauritius to support small and medium enterprises through preferential rates at 0.5 percent per annum.
Reforms for more social justice
Speaking about social justice reforms, Dr Padayachy dwelt on two important elements that have an impact on the pension system, including the demographic phenomenon of the ageing of the Mauritian population and the ratio of the active population to the retired population, which is drastically decreasing.
Universal Basic Pension
He recalled that the number of citizens over 60 years of age is expected to almost double in the coming decades, from 226,000 in 2019 to 410,000 in 2068. The number of people of working age is inevitably expected to fall from 825,000 in 2019 to 395,000 in 2100, a decrease of more than 50%, he said.
Thus the universal pension will be maintained at Rs 9,000 per month for every citizen over the age of 60. From now on, all increases in benefits for seniors will be paid from the normal retirement age of 65.
General Social Contribution
With regard to the General Social Contribution (CSG), the Minister of Finance, Economic Planning and Development has specified that this change in operation will make our system fairer, more equitable and more collective. Thus, from 1 September 2020, the new contributions from the National Pensions Fund (NPF) will be abolished.
Under the new system, as of 1 September 2020, employees and employers in the private sector as well as the self-employed will be legally obliged to contribute to the CSG. For basic salaries up to Rs 50,000, the employees’ contribution will be 1.5% and the employers’ contribution will be 3%. For basic salaries above Rs 50,000 per month, the employee’s contribution will be 3% and that of the employer’s 6%.
As regards the change in Solidarity Levy, Dr Padayachy pointed out that those with very high incomes will be called upon to contribute more actively in the economic development of the country, thus reducing inequalities, especially in the current economic context.