Sir Keir Starmer’s deal to hand over the Chagos Islands will fund tax cuts for Mauritians, the country’s Government has revealed. Mauritian PM Navin Ramgoolam announced on Wednesday that nearly £500 million in payments under the terms of the deal to gain control of the island will be used to pay off the island nation’s national debt.
The move will allow the government to get rid of income tax 81% of employed Mauritians, as well as raise minimum salaries, it is reported.
Mr Ramgoolam announced the reforms in a Budget speech on Wednesday, saying Chagos payments made to the UK for the next three years would help reduce the country’s national debt, which currently stands at around 90% of GDP.
Ministers are aiming to reach a long-term debt level of 60% for the government, and in order to do so, the expenditure and revenue sides of their budget would be adjusted, and the minimum salary of employees subject to income tax would be raised to £1,774 a year.
The move would abolish income tax for some 81% of employees, Mr Ramgoolam said, with the figure amounting to around 44,000 people.
It will also see taxes reduced on other earners, the Telegraph reports.
Sir Keir Starmer has faced criticism over the deal, which he previously said had a £3.4 billion net overall cost over 99 years.
However, Tories have claimed the real figure is over £30 billion a year, when including inflation and all the other costs Britain is paying beyond the leasing of the Diego Garcia base.
The rent for the base alone is broken down as follows: £165 million a year for the first three years; £120 million a year for the next ten; then £120m plus inflation for years 14-99.
On top of that the UK has agreed to cough up £45 million a year for 25 years for development in Mauritius; and £40 million for a Chagossian trust fund.
Assuming an average of 2% inflation over the next 99 years, this sums to over £30 billion.
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