Senior Citizens: A New Outlook and Approach
The senior citizens of the country are not just voters to be canvassed at the eleventh hour
By Mrinal Roy
The International Day of Older Persons was celebrated with added razzmatazz this week ahead of the general elections. It is patently evident that the government promise to senior citizens of the country to double their old-age pension to Rs 13,500 at the end of the next five year mandate in 2024 is an electoral carrot brandished outrageously on the eve of general elections. These are desperate electoral gambits coming in the wake of the government recent stratagem of rallying a ragtag cohort of dissenters and defectors from opposition parties to its cause. At this juncture, this electoral carrot is not a bird in hand but very much an elusive bird in the bush as it is subject to the sovereign verdict of the people at the forthcoming general elections. A government confident of its track record and sum of achievements during its tenure should be honest enough to be judged on its own merits and its governance instead of the lure of promises financed from public funds.
“Taxpaying senior citizens are compelled to be their own health insurers and whenever necessary foot the bill of the excessively high cost of health care and surgery if necessary from their savings. We are all aware that medical expenses in the country are quite costly and that surgery or interventional procedures such as colonoscopy, angioplasty, etc., cost from tens to hundreds of thousands of rupees which too often either wipe out the savings… This is the predicament of too many retired senior citizens after a lifetime of diligent service to the country. This is neither right nor fair…”
Beyond the jejune rhetoric, the government’s promise to double old-age pension is an irresponsible pledge bearing in mind the strapped state of public finances in the country, its costly ripple effect on, for example, the minimum salary and the competitiveness of the fragile sectors of the economy and the track record of wealth creation and stunted growth of 3.6%-3.8% during the 2015-19 period.
The many problems stoically endured by senior citizens in the country cannot be addressed as an afterthought through the electoral carrot of a better old-age pension on the eve of general elections. It has to be addressed with careful thought in a holistic manner. The senior citizens of the country are not just voters to be canvassed at the eleventh hour but people who have contributed enormously at different levels during the past decades to man and shape the modernization of the country and significantly contribute to its advancement and socio-economic development. What they require most is a truly innovative policy framework which addresses their specific existential concerns in as comprehensive a manner as possible but which also enables the country to tap and benefit from their immense pool of talent and wide range of expertise and experience for the common good. They certainly do not want handouts at public expense or vacuous rhetoric but cogent actions.
Iniquitous tax regime
For example, at a time when people have just submitted their tax returns to the Mauritius Revenue Authority, one cannot but be appalled at the iniquity of the tax regime applicable to the senior citizens prevailing in the country. People and the citizens of the country would expect the Minister of Finance and the top brass of the ministry who are presumably the architects of the tax regime applicable to have given careful thought to its structure to ensure that it is equitable to all categories of taxpayers and takes on board the ground reality of the country. This is obviously far being the case.
This iniquity is in particular borne by the taxpaying senior citizens of the country who are at a juncture of their lives when they are particularly exposed to unexpected health and other expenses. They therefore necessarily need an adequate cushion of disposable income to pay for any unforeseen medical treatment or expenses, live their old age with dignity and happily enjoy their retirement after a lifetime of work and contribution to the country.
Despite this grim reality, the tax regime applicable to senior citizens is a stifling straight jacket providing very little leeway to make provision for the unforeseen and costly medical and other mishaps of old age. There are presently some 224,000 senior citizens aged 60 plus representing nearly a quarter of the electorate whereas some 147,000 people are aged 65 years and above.
The galling reality is that the taxpaying retired citizens are not eligible to most of the tax allowances granted to employed mainstream citizens at a time of their lives when their strapped pension income is unable to safeguard them against unexpected and other unforeseen expenses associated with old age.
A cursory examination of the tax form shows that none of the reliefs provided therein are applicable to retired tax payers. The retired taxpayer benefits only from the second lowest income exemption threshold allowed in a fiscal year. In the fiscal year 2018-19, the threshold applicable to most retired taxpayers is Rs 355,000 except for those who can claim the additional allowance for a dependent spouse or a child who ‘cannot earn a living because of a physical or mental disability.’
In contrast, a wide range of generous tax relief is granted to employed taxpayers to cover the expenses related to up to four dependents and their university studies either locally or abroad, to deduct their interest on secured housing loan and to subscribe to medical insurance cover for them and their families. These allowances have been significantly increased over the years. Thus, taxpayers with four or more dependents benefit from an income exemption threshold of Rs 555,000 in 2018-19, when the vast majority of families in the country have up to two children and the decreasing household size was 3.4 in 2017.
For the 2019-20 fiscal year, this income exemption threshold has been further increased to Rs 600,000. In comparison the allowance for a retired taxpayer has been increased by a paltry sum from Rs 355,000 to Rs 360.000. The taxpayer with dependents pursuing a full time undergraduate course in Mauritius or outside Mauritius in a recognised institution can claim an additional Rs 135,000 to Rs 200,000 per child for a maximum of three children depending on whether the child is studying in Mauritius or overseas.
Neither right nor fair
It is patently obvious that all these allowances provided in the tax form are not applicable to retired taxpayers. For example, they cannot claim relief for medical insurance premium as insurance companies do not provide medical insurance cover to the retired owing to their age. They have to bear the full cost of their medical expenses at a time when these expenses tend to peak.
All things being equal, more senior citizens will seek health treatment for a variety of ailments associated with old age. Taxpaying senior citizens are therefore compelled to be their own health insurers and whenever necessary foot the bill of the excessively high cost of health care and surgery if necessary from their savings. The retired senior citizen must therefore be able to choose and make provision for the best healthcare required during his old age.
We are all aware that medical expenses in the country are quite costly and that surgery or interventional procedures such as colonoscopy, angioplasty, etc., cost from tens to hundreds of thousands of rupees which too often either wipe out the savings of the elderly or strap their treatment owing to lack of funds. It is only a minority of senior patients who can afford these costly treatments. Most of them depend on the public health service for treatment. This is the predicament of too many retired senior citizens after a lifetime of diligent service to the country. This is neither right nor fair.
Enjoy old age with dignity
We must remember that government has since 2015 forfeited billions of Rupees of state revenue through extremely generous exemptions from the payment of land conversion tax, land transfer tax, morcellement tax and income tax for a period of eight years, VAT as well as registration duty and custom duties granted to smart city project promoters richly endowed with land assets in prime locations.
Furthermore, the brunt of the fiscal burden of the country is borne by mainstream Mauritians through the payment of VAT, excise and taxes on goods and services which, as per the revenue estimate for 2018-19, represented some 64% or the lion’s share of tax revenue. In contrast, corporate tax represented some 14% of tax revenue.
Against such a backdrop, retired senior citizens should in principle not be taxed. Why should pensions be taxed? Senior citizens should in any case be granted a significantly higher income exemption threshold of say Rs 500,000 which would enable them to make provision for and choose whenever needed the most apt and efficient healthcare and treatment during their old age. This would provide a welcome relief to the retired senior citizens to cope with illness, treatment costs and unforeseen expenses after a lifetime of service at their place of work. It would also enable them to be financially independent to happily enjoy their retirement and live their old age with dignity.
Such a tax waiver should form part of a new outlook and approach to devise an innovative and holistic policy framework to address the existential concerns of the senior citizens in the country and ensure that they serenely enjoy the essential creature comforts of retirement. It is equally vital to review the public and private sector pension Funds and their considerable assets to ascertain that they are professionally and transparently managed and valued to ensure that they fully safeguard the pensions of their retired members. Political parties should therefore take a public call on these key principles underpinning polices relating to senior citizens in the country, ahead of the general elections.
* Published in print edition on 4 October 2019
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