Michael Sik Yuen: "We cannot remove taxes that contribute to subsidies"
In Ébène on Thursday, Commerce Minister Michael Sik Yuen contextualized the economic situation within a tense international framework, characterized by rising energy prices and pressure on public finances. He emphasized the need for caution, budgetary discipline, and collective responsibility in the face of challenges.
Minister Sik Yuen painted a picture marked by tensions in international markets, pressure on public finances, and the necessity to maintain subsidies on essential products. He called for prudence and collective responsibility. Speaking to the press on Thursday, April 16, at the SICOM Tower in Ébène, he discussed the difficult international context. "Globally, diesel and gasoline prices are rising," he noted, referring to an environment marked by conflicts and disruptions in supply chains.
According to him, Mauritius is not isolated from these global dynamics but still enjoys relative stability due to its management mechanisms. However, he stressed the magnitude of the inherited challenges. "We have inherited a catastrophic situation with a deficit of Rs 3.4 billion in the Price Stabilisation Account (PSA)," he said. The minister explained the role of the PSA, a key mechanism for cushioning fluctuations in international prices.
He provided a concrete example to illustrate its functioning: a recently arrived shipment would have resulted, based on current market prices, in a price of Rs 73.55 for gasoline and Rs 109.77 for diesel. "But thanks to the calculation system based on a six-month average, three months past and three months projected, these increases are not immediately passed on. That’s why it’s cheaper," emphasized Michael Sik Yuen. However, this mechanism is under pressure. The minister reminded that the State Trading Corporation (STC) must finance these discrepancies through loans, generating interest and worsening the deficit. He indicated that by June 30, 2024, the deficit was Rs 109 million and Rs 691 million by June 30, 2025. "The situation needs to be rectified," he insisted.
The Tax and Subsidy Debate
A significant portion of his speech was dedicated to the recurring issue of fuel taxation. Why not remove taxes to lower prices? The minister dismissed this option, arguing that it would have cascading effects on the entire subsidy system. "We cannot remove taxes that contribute to subsidies," he explained. According to him, eliminating these levies would lead to an increase in household gas prices and threaten subsidies on staple products like rationed rice and flour. He also defended the Mauritian social protection model: gas at Rs 250, rationed rice at less than Rs 30, subsidized bread at Rs 3.90, and free public transport. "It’s too easy to say remove the taxes," he remarked.
Basic Goods and Price Control
The government also claims to maintain active price control. A crisis committee has been established. According to the minister, currently, the prices of around 25,000 products are controlled with a mark-up framework between 20% and 34%. He also stated that current prices are generally lower compared to November 2024. Regarding rice and flour, the minister mentioned past abuses, including diversion for export or irregularities during the COVID-19 period and selling subsidized flour in Congo. He claims to have requested the Financial Crimes Commission to investigate.
Michael Sik Yuen announced ongoing discussions with the Chamber of Commerce and consumer associations, particularly about expanding the list of controlled products and revising margins on certain goods like eggs or meat. Regarding sardines, he indicated the removal of maximum mark-up to allow the market to adjust.
Adaptation and Collective Responsibility
The Commerce Minister believes that "the war in the Middle East is worse than COVID-19" in terms of its impact on global energy prices. Michael Sik Yuen stressed the need for adaptation rather than immediate reactions. He believes that the state cannot bear all the burdens alone and calls for shared responsibility.
Stable Supply
On the logistical front, Michael Sik Yuen aimed to reassure the public. Despite international disruptions and concerns related to conflicts, Mauritius reportedly has solid stocks.
As of April 16, the reserve levels are as follows:
- Gasoline: 39 days
- Diesel: 41 days
- Jet A1: 31 days
- Fuel oil: 38 days
- Gas: 49 days
- Marine gas oil: 17 days
Regarding Rodrigues, the minister indicated that no stock shortages have been recorded since January 2025. The territory currently has 22 days of stock in diesel and gasoline, with a new shipment expected to extend this to 42 days. "In terms of supply, everything is going well," he asserted.
Control and Vigilance
The minister announced several follow-up and control measures to protect consumers from abuses:
- Expansion of the list of products eligible for the Price Stabilisation Fund
- Strengthening the presence of the STC in the market with competitively priced products
- Increased vigilance from ministry officers in shops
- Display of subsidized products and controlled prices on shelves
- Monitoring of gas stations and reporting to the NLTA
- Tracking station closures before any potential fuel price increase.
