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.