Let us assume that we halve the average 8% growth rate target in 2008 and we reduce it by three quarters in 2009 to account for the Great Financial Recession. That’s a pretty conservative assumption because an average growth rate takes into consideration years that are below average. Let us also assume that the government revenue shortfall generated by the Sithanen flat tax for each year — you’ll have one for any given year if the actual growth rate is less than 8% — is reinvested at a rate equal to the rate of inflation until the end of 2015. Again this is a fairly conservative assumption.
Then at the end of 2015 the reinvested cumulative government revenue shortfall (RCRS) would have ballooned to Rs114bn. That’s 95% the size of the National Pension Fund at the time. Basically another NPF which would have allowed higher benefits to be paid or from an earlier age or some combination of the two. That would have been concrete proof of an ‘early harvest’ or a ‘bumper crop’. But that’s not the situation we’ve been in. Instead government has been trying for many years to target pension benefits. Rs114bn is also about 70% of the cost of a mass rapid transit (MRT) aka heavy metro system. We don’t need this system for now just like the Lepep tram but we would have been able to afford one. Rs114bn is almost half of our public debt at the end of 2015. This would have given us a better credit rating or at least a more favourable credit outlook. Rs114bn is also exactly six times the cost of changing all the leaking pipes of the CWA.
But this was in 2015 and given that the Lepep government has maintained the regressive policies and added a few of its own the shortfall has kept on increasing and compounding. Three years later it had exceeded Rs300bn.
9 comments:
Flat tax works for some, it is how they are selling our nation:https://businesstech.co.za/news/wealth/310918/why-south-africans-are-moving-to-mauritius-and-how-much-it-costs/
Any comments on this please:https://www.lexpress.mu/node/354038
@ Anonymous of 03 June, 2019 11:39
One comment? Er, this whole blog is a proper comment to that!
Any comment on this one:https://projekte.sueddeutsche.de/paradisepapers/politik/mauritius-a-tax-haven-in-the-indian-ocean-e648869/
Taxes you say Mr Sanjay, taxes! How about this one:
'And Mauritius offered engineering company SNC-Lavalin a significant benefit: a lopsided treaty signed with Senegal that, with the right paperwork, made it easy for the Canadian firm to avoid up to $8.9 million in taxes.
That lost revenue is no small matter in Senegal, a country where nearly half of the population lives in poverty, where 5 percent of newborns die and where one in six children are stunted by years of poor nutrition. The forgone tax would have covered half the cost of running Senegal’s largest public hospital for a yea'
More here:https://www.icij.org/investigations/west-africa-leaks/one-companys-tax-heaven-senegals-tax-hell/
''African Governments Are Paying for the World Bank’s Mauritius Miracle''
''Ghost offices on the small island provide legal but questionable means of siphoning tax dollars away from poor countries and into the pockets of the global elite.''
https://foreignpolicy.com/2018/10/18/african-governments-are-paying-for-the-world-banks-mauritian-miracle-malawi-mauritius-offshore-tax-havens-evasion-ifc/
Here is Dr ''Triple shock'':
''In view of the forthcoming Budget which will be presented next Monday, the former Minister of Finance writes the third part of a series of articles. He speaks of a triple-shocker affecting our tourism industry'':https://www.lexpress.mu/node/354276
I liked this bit: ''ix) The global business sector has recorded a lower growth of 4.3% in 2017 and 4% in 2018 and is forecast to expand at only 3.8% in 2019. It is being challenged by the modification of the India tax treaty, the changing regulatory, tax and substance landscape and pressure from global standard setting institutions;''
There was a treaty risk back in 2005. Instead of solving national problems (road safety, transportation policy, diabetes etc) guy kills savings, doles out €123m to dead sugar industry, fuels real estate speculation, tampers with welfare state, scraps TCSB, introduces easy hire-fire provision in labour laws and puts fiscal policy on unsustainable path with his dumb flat tax. No wonder then we're in a deep mess and the treaty risk got a lot bigger.
He sees shocks everywhere. Soon he'll be hearing voices like Joan of Arc.
His articles are filled with cherry-picking. For instance he's complaining about single-digit savings but doesn't tell us what happened under his watch. Another example is growth rate in the last 4 years are under 4% but he doesn't say it's been like this for eight whole years.
We've fact-check some of the crap here.
Yes, I agree with comments Sanjay, you summarised it well. Right now, as I type these words, one man is only telling us how much he will increase expenditures, no serious words on how he intends to increase revenue. But then his list of expenses are also just intentions that will not materialise given the timeframe before we go back to the polls.
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