The Social Contribution and Social Benefits Bill will be read for the second time today, Tuesday 20th July. Both inside and outside parliament, political parties opposing the government have joined forces to criticize the government’s move to adopt a new mechanism to create a comprehensive regulatory system to consolidate the administration and operation of the new social contribution system known as Contribution Sociale Généralisée (CSG) amidst deep socio-economic crisis.
Rs. 150 per month; this is the minimum amount that will have to be contributed by every self-employed. If the person or “participant” as he is referred to in the Bill, earns a “remuneration”, he will be contributing 1.5% of his basic salary while his employer will contribute 3% of his remuneration. According to the Bill, “every payment made in respect of social contribution shall be credited to Consolidated Fund” of the Ministry of Finance and Economic Development.
Since Saturday, the Opposition has been on the offensive. Paul Berenger, former Prime Minister and Leader of the MMM, argued that the fact that the contributions of the working population will be channeled to the Consolidated Fund means that the contributions that will be made by the active population will be used in future National Budgets to finance recurrent and capital expenditures and not set aside to guarantee retirement pension of citizens.
226,758 people registered as self-employed and benefited from Self-Employed Assistance Scheme during the past lockdown.
The members of the L’Alliance Espoir are unanimous. Government, through the various processes, needed to obtain either financial assistance or to obtain Work Access Permits has gathered significant data on the informal sector and will now use the new data to track and monitor contribution from the economically active population and to a huge extent, the economically inactive population as well.
64,700 Mauritians were driven outside the labor force between December and March 2021. Most of whom are now benefiting from the Work Assistance Scheme or the Self-Employed Assistance Scheme.
The Labour Party has also made its voice heard in a press conference yesterday, Monday 19th July. The leader, Navin Ramgoolam, said that the whole process is unethical since the Government is being sued on the matter over the discrimination caused to private sector employees. In the eyes of the former Prime Minister, the fact that the Government now proposes Rs. 13,500 only to people aged over 65 years old and Rs. 9,000 to people between 60 and 65 years as from 2023 reveals serious weaknesses in the new social contribution and social benefits system. He believes that by 2024, the Government will have to increase the rate of contribution of the “participants” to “sustain deficits worth over Rs. 5 billion” in the scheme.
The new CSG will disrupt the flat rate basic retirement pension system that was introduced in Mauritius in 1976. However, the Government now has a significant advantage. It has formalized areas of the economy that have so far evaded taxes and has lowered contribution to the former National Pension Fund from 3% to 1.5% for low-income earners.
