Mansoor Circular Misleading Nation

In it the Financial Secretary (FS) is saying that he was expecting our economy to ride on the coattails of a rebounding world economy. That of course made sense to him and to his university buddy as they had been attributing some of the worst growth rates in decades our country has clipped to unfavourable international factors only. Now that the world economy is growing faster than Mauritius Mr. Mansoor has had to come up with a new set of external culprits to justify a fresh round of unnecessary budgetary cuts. So as not to look too silly.

But the above equation reminds us that the FS is not telling the whole story. Indeed the amount of money our government collects depends not only on the size of the economy (GDP) -- and therefore indirectly on its growth dynamics -- but also on the average tax rate. Flattening our progressive taxation system to 15% besides creating a lot of social injustice crucially depended on the arrival of higher growth rates if we didn't want to end up with the worst of both worlds: more debt and getting nothing much accomplished.

We never got the required robust growth rates. We know we couldn't. We only contracted more debt and our problems in 2010 are worse than what they were 5 years earlier.