Kugan Parapen: "Is 12 cents enough?"

Kugan Parapen, the Junior Minister of Social Security, defends his proposal to establish a new tax bracket for employees earning more than Rs 150,000 per month, while dismissing the idea of simply reducing the salaries of elected officials to lower fuel prices.

In a Facebook post, he explains that if all deputies, delegated ministers, and government ministers halved their salaries, it would only reduce fuel prices by 12 cents per liter. According to him, this measure would remain purely symbolic and have no real impact on the purchasing power of Mauritians.

Parapen points out that this salary reduction would yield around Rs 65 million per year for the state, while a one rupee reduction in gasoline and diesel prices would represent a loss of Rs 551 million. He advocates for more structural solutions to alleviate the tax burden on the population.

Here is the full message from Kugan Parapen:

"Is 12 cents enough?"

If all deputies (including those from the parliamentary opposition), delegated ministers, and government ministers halved their salaries (by 50%), we could reduce fuel prices by... 12 cents! Yes, you read that correctly – not 12 rupees, not Rs. 1.20, but just 12 cents. Mauritians may have a sense of repartee but, unfortunately, lack a sense of proportion. This should have been a quick, even elementary calculation. Shearing 64 elected officials to feed 1.2 million people will never be a viable solution. It remains a "symbolic" action, a futile gesture.

The public has been calling for a reduction in excessive fuel taxes for years – and they certainly demand much more than twelve cents. This is why I argue for going beyond symbolism, seeking a real impact. Let’s consider these twelve cents – how did we arrive at this ridiculous figure?

Halving the salaries of elected officials would bring in 5 million rupees to the state each month – 65 million rupees per year (including the 13th month). A good start. However, the fuel consumption in Mauritius is gargantuan – 270 million liters for gasoline and 281 million liters for diesel annually. The calculation is simple – reducing the tax by one rupee per liter would mean a loss of 551 million rupees for the state (270m + 281m). But with the salary cuts for elected officials, only 65 million are available, not 551 million. Ultimately, fuel prices can only be lowered by... 12 cents!

Rezistans ek Alternativ has always advocated for a return to a progressive tax system, where the private sector and those with the highest salaries contribute more to the state's coffers. This return to a progressive model would relieve a large part of the population, including the middle class and the lower-income groups. With this in mind, and the desire to find solutions that will have real impacts, I proposed instituting a new tax bracket for those earning more than Rs. 150,000 per month. We are talking about less than 5% of the Republic's workforce.

However, some bourgeois individuals are unhappy, and they make it known. Insults, threats, and ultimatums! Just that. My favorite: "Leftist bastard." I took the time to read the numerous comments opposing this measure and I find the justification somewhat indecent. The main argument is that these gentlemen and ladies earning very high salaries by Mauritian standards have worked very hard to reach where they are, and thus, in the name of merit and effort, they should keep the fruits of their sacrifice. An argument akin to "Every man for himself, and God for us all." Yet these bourgeois earn more than ten times the minimum wage. Is there any substantial study justifying this disparity? Should a doctor earn more than twenty times a nurse's salary? And if that is the case, is a government intervening to try to rebalance the situation a "communist" government or one seeking balance through fiscal justice?

Another argument suggests that instead of "attacking" the petty bourgeoisie, we should seek money from the bourgeois – those who hold the "real" capital. An argument to say that high salaries are not privileged; only capital holders should be taxed. With the introduction of the "Fair Share Contribution" and other levies on the private sector in the last budget, the effective tax on the private sector has exceeded 30% in most cases – for high salaries, the direct income tax is capped at 20%, except for those earning more than 12 million per year (which is only a handful of people). I am absolutely not against more progressive taxes on the wealth of this bourgeoisie, but does one preclude the other?

It is worth noting that progressive income tax was a reality in Mauritius before 2006. In fact, the maximum tax back then was 30%, and many of the wealthiest in our society paid this tax. Sithanen’s 2006 budget changed everything with the introduction of a very light tax regime at 15%. Twenty years later, the reality is stark: the population is suffocated by indirect taxes while the privileged face ultra-light taxation.

Another point to highlight is that high salaries are taxed progressively in almost every country in the world. The exceptions are tax havens that maintain light taxation to make their model profitable, at the expense of the middle class and lower-income groups, who are asked to bear the fiscal shortfall through excessive taxes on products like fuel.

Finally, I want to clarify my position on salaries; I am not asking to tax ALL the income of those earning over Rs. 150,000 per month at 30%, only the taxable portion above Rs. 150,000 per month. To simplify, the income tax at 30% would only apply to annual income exceeding Rs. 2 million. In other words, if someone earns Rs. 2.5 million a year, the additional tax they would be required to pay is Rs. 50,000. Is this an abusive position?

In conclusion, I am a supporter of concrete actions that will relieve the population, not symbolic actions that will not benefit many. Some may say that 12 cents is already something. I propose to lower fuel taxes by much more – FIVE RUPEES. If our economic situation allowed it, perhaps there would have been no need to offset this loss in the state’s coffers elsewhere. But with a debt rate of 90%, the loss from lowering fuel taxes unfortunately cannot go unbalanced. Ultimately, I am not asking to add taxes on the population – rather, I am calling for a re-engineering of our tax model. Exempting the entire population from Rs. 5 in taxes on every liter of fuel and compensating this with an additional 10% tax on incomes exceeding Rs. 2 million for high salaries, including those of ministers and delegated ministers.

Are you with me? ✊