Friday, July 16, 2010

Flat Tax Spins Public Finances Out of Control

That's because the robust growth rates that were needed to sustain the 15% flat tax of Dr. KonnTu and his Bretton-Woods-minted charge nurse never arrived. See, as fiscal receipts depend on growth rates and effective tax rates you can only slash the latter if the former are much higher. Otherwise there won't be any money to solve important national problems or debt levels will spin out of control. A flat-tax also brutally increases the divide between the haves and have-nots.

Unsurprisingly Ministers of the last government have said in private that they were consistently told that there was no money to do anything right from the beginning. So nothing much was done and Mauritius in 2010 is a less competitive place than it was back in July 2005. People have also become poorer and many have lost faith in the future of their country and in their own.

Given that Mauritius will not see any robust growth rates anytime soon matters will get worse and beyond any political repair. Which is why Pravind Jugnauth has to present a new budget. Right away.


Anonymous said...

Just wondering: did the MBC news talk about the audit report? Not sure I heard anything on this!

I think the 15 percent tax will remian in place, otherwise Duval will no nothing to do - he's busy pretending he's helping the poor by asking 1 percent of profit money from the private sector which has been saving millions it should have paid to the govt

Sanjay Jagatsingh said...

Pravind is busy saying two things these days: one is that he will accept any new responsibilities given to him and essentially that government is short of cash. Isn't that funny that he just presented a budget?

Sanjay Jagatsingh said...

Doesn't get any weirder: government has a big revenue shortfall but still forgoes many tax streams while Mauritius gets defaced.