3 days ago
Starmer's Chagos ‘surrender' will fund tax cuts for Mauritians
Sir Keir Starmer's Chagos ' surrender ' deal will fund tax cuts for Mauritians, it has emerged.
The Mauritian government has said it will use almost £500 million in payments under the terms of the Chagos agreement to pay off its national debt.
This will allow ministers to abolish income tax entirely for 81 per cent of employed Mauritians, and raise minimum salaries.
Sir Keir has been criticised over the deal, which will cost the UK up to £30 billion over a 99-year period, including rent payments to use a joint US-UK military base on the Chagos Islands and creating a pot of development spending for Mauritius.
Conservative and Reform MPs have said the 'surrender' of the islands, which have been owned by the UK since before Mauritius was granted independence in 1968, is unnecessary and expensive.
The terms of the deal include rent payments of £165 million a year for the next three years for the Diego Garcia military base, which has been used for bombing runs by Britain and America in the Middle East.
Mauritian leaders celebrated the deal as the ' decolonisation ' of the Chagos Islands, which lie at the centre of the Indian Ocean and are uninhabited except for military personnel.
Navin Ramgoolam, the Mauritian prime minister, has now announced that the money paid by the UK will help Mauritius cut taxes, so that 81 per cent of people in the African island nation will not pay any income tax.
It comes despite warnings that Britons face tax hikes in Rachel Reeves's Budget this autumn, which is now thought to contain a black hole tens of billions of pounds large.
The Mauritian reforms were announced in a budget speech by Mr Ramgoolam on Wednesday, when he said that the UK's Chagos payments for the next three years would be used to help pay off the country's national debt, which has reached 90 per cent of GDP.
He said that to reach a long-term debt level of 60 per cent, the government would adjust 'both the expenditure side and the revenue side of the budget', and raise the minimum salary before an employee pays income tax to £1,774 a year.
That increase, of 28 per cent, will scrap income tax entirely for 44,000 people and reduce levies on all other earners.
'As a result of the measures I have introduced, 81 per cent of employees in our country will not pay any income tax,' he said, adding that he had also decided to cut VAT on some food products.
After three years, British payments for the Chagos Islands will be used for a 'future fund' to 'create wealth for future generations,' Mr Ramgoolam said.
Dame Priti Patel, the shadow foreign secretary, said the announcement showed that Mauritius had taken the 'feeble and pathetic' Sir Keir 'for a ride'.
'The only people benefiting from Labour's higher taxes are the people of Mauritius,' she said.
'While causing a financial black hole in Britain, whacking up our taxes and planning further tax raids, Labour's Chagos surrender deal means families in Mauritius will see their taxes cut at our expense.
'This is an insult to hard-working British people who have once again been betrayed by Keir Starmer with millions more paying more in tax.'
