Thursday, November 7, 2013

Do Mauritians Need To Learn How To Save?

Not really. We were always big savers. For example the average savings rate during the 15 years preceding the Sithanen/Mansoor reforms was 26.4%. A few years into the reforms it had hit a 30-year low of about 12%. 

Hmm, so tax rates are cut by 50% and savings plunge by about an equal amount? That does make a lot of sense because people adjust their savings to keep their standards of living at about the same level.

So no, we don't need any advice on building a savings nest. What we need is to make sure that bean-counters are always kept away from policy positions. Because although they will sound the alarm they can also go on and screw up big time. Which is a darn good measure of their skill level.


Anonymous said...

Halving tax rates should have increased the disposable incomes of households.
To make sense, this post should explain how inflation during this period headed north and also how various savings incentives have been disallowed for tax purposes.

Sanjay Jagatsingh said...

It would not increase the disposable income of people who were already paying a maximum of 15% before because they were not making enough money to have part of their incomes fall into higher tax brackets.

This post does not have to explicitly include the robust inflation the Doctor -- and his charge nurse -- produced to make sense -- we've got plenty of conversations on this blog that deal with that. What we're saying here is at a more obvious level: our savings was high for a long time before the dumb reforms. So Mauritians don't need preachers for this.

Besides by saying that they adjust their savings to keep their standards of living constant aren't we implicitly saying that there was a lot of inflation?

akagugo said...

"adjust their savings to keep their standards of living constant"

What savings for those in the contruction industry which is to contract for the third year running...? Ena enn ki ti pé dirr: "quand la construction va, tout va". Abé quand ça va pas du tout, ki pou arrivé?