15% Flat Tax is Enemy of Good Growth

Bean-counters' answer to their own manufactured lie was a promise of robust growth rates if we reduced taxes by 50%. That -- as expected -- didn't happen. They said well it's because of the financial crisis. Not really, the mess we're in was hatched in Mauritius: our economy didn't rebound in 2010 when the rest of the world did. Besides 57 countries had better growth rates than us in the first three years of the reforms -- which include, by the way, the years of 'early harvest' and 'bumper crop'.

But government has collected more revenue they say. Its revenue can increase if you have higher growth rates, better collections or if you are ripping us off with unreal prices. There has been better collections -- this can happen irrespective of tax rates -- but they did not make up for the shortfall caused by the string of ridiculously low growth rates of the reform vintage. Which is in any case what the PBB circulars have been telling us year after year. One is mostly a one-off thing, the other a cancer that spreads rapidly. You can find that out by recomputing the revenue government collected minus the stupid things (hedging billions, abusive energy prices, making SMS more expensive, high internet prices, wider-than-necessary interest rate spreads, etc). And have a look at the servicing of our debt and its structure for some additional clues that we need to add a couple of higher tax brackets on budget day. Having a good look at recent shutdowns of the US government is also not a bad idea.

And if unemployment has stayed stuck above 10% since the reforms began is it because our people don't have any good skills or is it because there are too many poverty-pay jobs on offer? And because the floodgates of stupidity have been opened? And no, we cannot increase productivity forever in one activity. We need to do other stuff. And use a range of tax rates to make intelligent bets.

Finally if our trade relationship with the rest of the world is unbalanced is it because we're not exporting enough or because we are importing things that we don't really need?

State Flip Flops On the CNT

First it reallocates routes to private companies because a number of the CNT buses are apparently unfit for our roads. That seemed to have been discovered right after 11 people died recently in a gruesome accident in Soreze. And then workers strike because they feel it's a disguised attempt to privatise their organisation essentially asking why would the most profitable lines be transferred if not to further weaken the company.

Government then u-turns under pressure and hands back the lines. The strike stops but then on Friday Cabinet maintains the reallocation of the routes saying it cannot play with the security of passengers.

Now, isn't that funny? Tolerance for killer buses doesn't seem to be uniform among cabinet members. It would be interesting to find out the safety features of the CNT buses compared to let us say those of the official cars that are provided to Ministers. And about the operational history of each of the buses that the CNT bought over the last 20 years or so. Not bad either if we could be told what exactly was done after the accident in Montebello in 2009 where four people lost their lives.

By the way, how come the state buys sophisticated transport equipment like the Airbus A-340 and then buys crap for the travelling citizens. That too after an early harvest and a bumper crop?

Education Spending Not Alone in Falling Behind Inflation

So we learned today from the DPM. Expenditure on major pipe replacements for the past five years have been as follows: 2005/06: Rs225 million; 2006/07: Rs200 million; 2007/08: Rs160 million and 2008/09: Rs150 million; and Rs210 million in 2010. But Rs400 million have been spent in 2011.

The only two things that seemed to have kept up with rising prices are the crappy working paper industry and the attention given to crappy bean-counting indices.

Xavier Starting on Right Foot

Paying a full compensation for salaries up to Rs7,000 per month and a partial one up to Rs30,000 has been well received. And given that the minimum compensation paid will not be lower than Rs330 someone making Rs3,000/month will be getting an increment of 11% which is almost twice the inflation rate.

And as noticed by several people including Reaz Chuttoo of the Confederation des Travailleurs Du Secteur Prive (CTSP) the Government seems to be acknowledging that a minimum salary shouldn't be lower than Rs7,000. Besides SC/HSC fees are now paid by the State for family income not exceeding Rs14,500. That's another hint.

XLD's move also smashes a myth that a finance minister will have more consideration for the lower-income groups if he sported the ancestor of havaianas when he was a teenager. Especially after claiming to have read all the books on poverty.

Yep. Mr Chuttoo, reminded us in an interview that the salary threshold for receiving a full compensation was reduced by 40% from Rs4,500 to Rs2,700 in 2008. Which was apparently the year of the Bumper Crop... 

The Bumper Crop That Wasn't

You already know what Shaitanomics did to our savings rate. Here's something else to confirm that you've been taken for a bean-counting ride for too long.

On December 13th 2005 given that the economy was looking good in Brazil the Lula government announced that it would be paying back its USD15.5 billion IMF loan in advance. Argentina followed suit a couple of days later with a similar announcement. That's also what Lutchmeenaraidoo did in the 80s after he bewitched cyclones into avoiding Dodoland.

Compare this to Mauritius contracting billions of rupees of Bretton-Woods debt during the so-called bumper crop. That too after receiving tens of billions of FDI.

76 Countries Had A Better Growth Rate Than Us in 2008

And as you recall that was supposed to be the year of the bumper crop. Still that's a 100 spots better than our ranking in 2005 a year when our textile industry completed a major contraction.

Minister Damages Island's Reputation

Rama Sithanen has recently been saying that he's trying hard to prevent us from going into the IMF's ICU. That's inconsistent with a bumper crop, don't you think? And that will definitely make potential investors, local as well as foreign, quite edgy because when a country goes into the loan shark's mouth that ain't exactly a walk in the park. Do I need to elaborate on what this irresponsible statement will do to the psyche of the population already severely impoverished by the finance minister?

Of course, how could we not go into the IMF's ICU when that seems to have been the final and only objective of the man who sported the ancestor of havaianas till the age of 16. Indeed he brought in a charge nurse from Bretton Woods, opened an ICU of the riot-producing institutions in Port-Louis, borrowed billions of rupees we don't need from them and has been implementing policies that seem to come straight from a letter of intent which Mauritius never signed and which are designed to bring our country to its knees. Does Ramgoolam know he's the leader of the Labour Party?

How Many Makes it Perfect?

I mean storms. On one hand he says that there are currently 7 storms hitting Mauritius and on the other he says that his priority is to avoid the perfect storm?

The other inconsistency he's been blurting out recently is that he's trying to avoid Mauritius from going into the intensive care unit of the IMF. How could that ever be possible after he brought an early harvest followed by a bumper crop to us?