Fiscal policies and taxation measures for a prosperous and equitable society

The income exemption thresholds for all categories of taxpayers for the income year 2019-2020 have been increased with the objective to alleviate taxation burden for tax payers especially for lower and middle-income families.

The new income thresholds are as follows:

The budget makes provision for an additional deduction for a child pursuing tertiary studies and relief for medical insurance premium for a maximum of 4 dependents instead of 3 dependents. An additional income tax exemption of Rs 50,000 will be granted to a retired or disabled person having more than one dependent.

Moreover, a tax credit of 5 percent will be granted for an employee, if his salary, inclusive of salary compensation in the first month is below Rs 50,000 and if he earns annual net income below Rs 700,000 in that income year. This budgetary measure will allow an estimated additional 5,000 employees to benefit from the reduced 10 percent personal income tax rate.

As regards the Solidarity Levy, lump sum income received by a person as pension or death gratuity is being excluded from the computation of the levy. However, the levy will now apply on an individual’s share of dividend in a société or succession.

Taxation of Products

Government has also shown strong commitment to ensuring consumer protection and increasing the purchasing power of the population by raising wages, lowering income tax rate, raising income tax threshold, increasing government transfers, providing subsidies on basic consumer goods and by acting directly on excise taxes.

Excise duties are being lowered and Value-Added Tax is being waived on certain basic commodities so as to lower their prices and further raise purchasing power of citizens. These include:

·         reduction in the price of Mogas from Rs 47 per litre to Rs 44 per litre;

·         reduction in the price of Diesel from Rs 38 per litre to Rs 35 per litre;

·         reduction in the price of 12 kg cylinder of cooking from Rs 240 to Rs 210; and

·         the Provision of Rs 1.7 billion as subsidy to maintain retail prices of rice, flour and LPG.

Furthermore, the State Trading Corporation will invest Rs 1 billion in the construction of new warehouses in Mauritius and Rodrigues for rice and flour in a bid to increase stock.