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?

Understanding Resilience: Part 3

We know that too much foreign debt can make a country bankrupt: ask Thailand. Here too we've been taking up too much of it for the past 5 years. Indeed, the share of foreign debt in the total debt of the central government has literally doubled between 2006 and 2010. That's all the more worrisome given that these monies have not been used to improve our competitiveness or reduce frustration levels of the common citizen. Far from it.

Basant Roi Can't Figure Out Big Rise in Foreign Debt

So he said on Radio+ a few minutes ago. He finds this the more surprising given that the banking system has been witnessing excess liquidity for some time now. Government could instead have borrowed locally. What does the FS have to say about this?.

He also mentioned that he enjoyed working as Governor with Paul Berenger in Cabinet as the latter never meddled in the affairs of the Bank of Mauritius. Give us a break!

Mansoor Doubles Foreign Debt in 3 Short Years

By guzzling an extra Rs9 billion. This makes Mauritius more vulnerable and is inconsistent with slogans like 'reforms have saved the economy'. And that's definitely something Africa doesn't want to copy.