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Thursday, February 29, 2024

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Cost Of Living: A Food Solidarity Voucher Would Be Better

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The same subsidy that delights consumers makes observers grumble. The Subsidy announced by Prime Minister Pravind Jugnauth in the National Assembly on Friday, July 9, will amount to 500 million rupees for a fixed period of six months. However… However… However… we hear from the most engaged!

Importers receive this subsidy of Rs 500 million through the Mauritius Revenue Authority (MRA). The Items concerned are canned sardines and tomatoes, milk powder, cheese, margarine, edible oil, dry grains. These controlled items involve approximately 250 imported brands. The consumer should pay them at the same prices in January 2021.

“… scratched the surface”

While this is a positive step for consumer relief, we are still looking to understand the six-month mechanism. We regard this subsidy as a window-dressing, we have only scratched the surface. Our economists are on the case. We are also work on our price observatory ” says Rajen Narsinghen, founding member of the Front Contre l’Augmentation des Prix Exagérées (FCAPE), which has seen nothing but fog since this announcement.

Among the major interrogations of this new Common Front: How will the government subsidize this population of about 600 food importers? Would it not be better to remove VAT from a list of basic foodstuffs? How does the government manage these ‘crooked’ traders who are some more profiteers than one another? Finally with the new two rupees tax on petrol and diesel which is intended to support the Covid Fund and other subsidies, will it not draw from this ‘Aid’ from this ‘account’? Subsidy means taking from an already established fund to support the Aid, where it is taken from and how these Rs 500 M  are going to be covered?

My approach is above all socio-political, economic and legal. I support the approach of Resistans ek Alternative in their proposal for a Food Solidarity Voucher“, concludes the Professor of Economics and Lawyer.

A voucher for the most needy

A monthly Food Solidarity Voucher of Rs 2500 that will help every person who earns a salary of Rs 10,500 or less until the end of December 2021. It will also be necessary to count unemployed people and people with disabilities. It would be ideal if the government works with the registers of the MRA and social security,” demands Stephan Gua from Rezistans ek Alternativ (ReA). This Voucher could lighten the burden on consumers who receive the minimum wage in their shopping budget. The rate of this voucher was calculated after a test done on three shopping carts of an average consumer in three various supermarkets including the products and brands that appear on the government’s list. “According to our calculations the consumer will only beneficiate Rs 114 to Rs 120 on the foods that are on the list. It is not much over a month. The rate of Rs 2500 is quite decent“, believes our interlocutor.

On the other hand, he points out that “we have detected mismatches in the prices charged in these three supermarkets on products of identical brands. The government should take an interest in this as soon as possible.

“So ambiguous… »

Nevertheless, he is against this measure because according to his analyses on the subsidy case and relying on the April 2021 report of the World Bank he castigates, “this Subsidy is as ambiguous as the last budget and the depreciation of the rupee. Rs 500 million rupees that will benefit these importers who are mostly in the cartel denounced by the World Bank. They monopolize imports and benefit from government support or non-verification. If the Competition Act in imports were really applied and if there were not this corruption at customs, supported by high-ranking officers, would we be faced with such a situation?” he leaves us with this interrogation. Food for thought

The Subsidy is the subject of debate and risks costing middle-class Mauritians more.

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