The Budget 2014 carries special importance as the Honorable Finance Minister lays down a foundation for the next wave of prosperity and the vision of a high income nation against the backdrop of major challenges facing the global and the Mauritius economy. Compared to a downward revision in GDP growth rate by some countries, the Finance Minister has announced a series of measures to increase the GDP growth from 3.2% in 2013 to a rate of between 3.8% to 4% in 2014.
A key positive aspect of the Budget is to achieve an inclusive growth by invigorating investments and growth and building a modern and caring society.
The Finance Minister, being fully aware of the challenges to the economy in the form of increasing budget deficit, increasing unemployment rate, reduction in activities in some of the key economic sectors including construction industry and crisis of demand in our main markets, unveiled concrete measures to strongly stimulate growth, investment and employment.
The Finance Minister has expressed sentiments on reviving growth through new drivers of growth leading to inclusive and sustainable development and within constraints imposed by a lack of economic space, he has delivered a budget which seeks to empower the nation towards the next wave of prosperity.
On the direct tax policies, the government is aiming to contain the deficit temporarily by garnering higher revenuefrom banks by changing the basis of calculation of the special levy to 10% of chargeable income applicable for 2014 and 2015 for Segment A banking activities compared to the current basis of a proportion of turnover and book profits. The special levy together with income tax of 15% and 2% of CSR creates an overall charge of 27% for Segment A business for banks.
On indirect taxes, the increase in rate of excise duty on alcohol and tobacco products by 5% are as expected. The proposal to review the CO2 levy / rebate scheme on motor cars to address the operational issues arising from submission of CO2 emission certification is a welcome solace to the motor vehicle industry.
In summary, the Finance Minister delivered a budget consisting of numerous economic and social measures to achieve greater prosperity. The success of these measures will depend upon the extent to which they can be implemented effectively. Whilst the foundations for growth have been laid, growth is likely to be moderate in the medium term until the results of the new initiatives bear fruit.