I am writing this following a suggestion to talk a bit more on the infamous Sithanen toohrooh. A good idea given that it is the product of the worse thing that has happened to us after slavery: the Sithanen flat tax. I started posting about the toohrooh almost seven years ago. And I can't think of a better way than to explain how I estimated it. So people can play with the numbers and understand how we've been taken for a destructive ride.
Actually you need very little data to compute the toohrooh: real GDP growth and nominal GDP. That's it. These are in the 2nd and 3rd columns. We'll show the computations for 2006 but bear in mind your numbers may be slightly off because of rounding error. Nominal GDP growth is computed from nominal GDP numbers of adjacent years. For example the 11.52% is obtained from 213,444/191,393. Implied deflator is a measure of inflation and is the ratio of the nominal GDP growth to the real GDP growth. That is we got the 5.61% from 1.1152 / 1.056 – a more precise calculation than simply subtracting real GDP growth from nominal GDP growth.
Growth needed is the robust 8% real growth promised by Sithanen for slashing our already low taxes grossed up by the implied deflator. We have to do this because GDP and government revenue numbers are computed in nominal terms. So far so good? So growth needed for 2006 is 14.06% (1.08 x 1.0561). With the last number we can get the nominal GDP compatible with an 8% real growth rate. This turns out to be 218,295 or 14.06% higher than the 2005 number. This is 4.851 billions more than the actual nominal GDP of 213,444 and it produces close to a billion rupees of revenue shortfall for our government for 2006 alone if we assume a very conservative government revenue to GDP ratio of 20%.
The numbers for the other years are calculated in a similar fashion. And we've added two cumulative columns to show how the size of the toohrooh has been growing for the past 12 years. As you can see the toohrooh closed 2017 at Rs1.2 trillion and will grow by another Rs300bn this year. You will surely realise that the cumulative revenue shortfall at the end of 2015 was already about enough for Mauritius to get herself a heavy metro system not the junk that's bludgeoning the Promenade Roland Armand.
On dit merci qui?
Growth needed is the robust 8% real growth promised by Sithanen for slashing our already low taxes grossed up by the implied deflator. We have to do this because GDP and government revenue numbers are computed in nominal terms. So far so good? So growth needed for 2006 is 14.06% (1.08 x 1.0561). With the last number we can get the nominal GDP compatible with an 8% real growth rate. This turns out to be 218,295 or 14.06% higher than the 2005 number. This is 4.851 billions more than the actual nominal GDP of 213,444 and it produces close to a billion rupees of revenue shortfall for our government for 2006 alone if we assume a very conservative government revenue to GDP ratio of 20%.
The numbers for the other years are calculated in a similar fashion. And we've added two cumulative columns to show how the size of the toohrooh has been growing for the past 12 years. As you can see the toohrooh closed 2017 at Rs1.2 trillion and will grow by another Rs300bn this year. You will surely realise that the cumulative revenue shortfall at the end of 2015 was already about enough for Mauritius to get herself a heavy metro system not the junk that's bludgeoning the Promenade Roland Armand.
On dit merci qui?
2 comments:
I'll make a safe bet: Emmanuel showing his true colours will be used as a glam publicity by your best fiend Ramma when his time comes to lead the MoF again... Ayo sorry! Mo lalang cabri!
Pans pa li pu revini.
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