Kugan Parapen: "Out of 126 countries, 93 have increased fuel prices"
Kugan Parapen, the Junior Minister for Social Security, has spoken out against the rising fuel prices. In two consecutive posts on Facebook on Thursday, April 16, and Friday, April 17, he emphasizes a key point: the surge in prices is primarily a global phenomenon that Mauritius cannot escape from, but it is managing to cushion the impact better than many other countries.
He states, "Resilience cannot be improvised; it has to be planned." In his analysis, Kugan Parapen recalls that since the onset of the conflict in Iran, the price of diesel has risen by 21% in Mauritius. While this is indeed an increase, it should be put into perspective: among the 126 countries studied, 93 have raised their diesel prices by at least 10% in their respective domestic markets since the war began. "Mauritius ranks low in terms of price increases," he notes, emphasizing the global nature of this crisis.
The Junior Minister also addresses criticisms regarding the choice of international comparisons he highlighted in his initial post. After referencing high-income countries like France, the UK, and the US, he now mentions economies more comparable to Mauritius, such as Malaysia, Thailand, Vietnam, and Turkey. "What I aimed to illustrate is that even high-income countries had no choice but to significantly raise their fuel prices. For countries that may be more similar to Mauritius, the conclusion would have been the same. The increase is widespread," he asserts.
Disappearance of Subsidies
He also dismisses the notion of government "inaction." On the contrary, he argues that the state has voluntarily absorbed a significant portion of the shock through the Price Stabilisation Account (PSA). This mechanism currently allows for a subsidy of about Rs 30 per liter for diesel, provided by the State Trading Corporation (STC).
Regarding calls to eliminate fuel taxes, a long-standing request from Rezistans ek Alternativ, Kugan Parapen remains cautious. Such a measure, he claims, would lead to the disappearance of subsidies funded by the PSA, without any real impact on pump prices. "It cannot be denied that the STC is currently selling diesel at a heavily subsidized rate. A subsidy of at least Rs 30 on each liter of diesel at this moment, if I understand correctly. In the current challenging economic context, removing taxes would automatically result in the removal of STC subsidies through the Price Stabilisation Account," he explains.
Nevertheless, Kugan Parapen is open to a broader tax reform, suggesting that any reduction in fuel taxes should be offset by higher taxation on high incomes and substantial profits. "The review of taxation on petroleum products should be a policy measure where the loss of revenue would be compensated by direct taxes on high salaries (above Rs 150,000 per month) and on significant profits," he stated.
