Toxic Bean-Counter Says Hike of Top Tax Rates Won’t Work

People, he said, will just engage in more tax-planning or take part of the salary in stuff like a passage benefit. At the same he asked the Minister of Finance to make a u-turn because the flat tax has been a fundamental element of our success during the last fourteen years.

Well if it won’t work it’s kind of useless to ask Minister Padayachy to reconsider this policy decision. Plus passage and other benefits may be made taxable. Besides we can do a little research on how Sweden and other countries collect revenue with tax rates as high as 70% (we might look at our own history too as they were that high at one point in time). For sure I don’t see how two of his colleagues will spend a cute sum of money on air travel especially after Covid-19.

As for the success of his tax reforms he can start by answering two questions. 1. In how many years since 2006 did we get the promised 8% growth (he can tell us about 7% and 6% rates too); and 2. What has been the total impact if any of not reaching that target in terms of GDP and government revenue shortfall? 

Bérenger Says He’s the Real Miracle Man

And not Lutchmeenaraidoo because he did all the work after the 60-0 in 1982. This is another funny statement from him because he was Minister of Finance for only nine months and if you read Cuttaree’s Behind The Purple Curtain you can’t fail to notice that about the only thing they were busy doing until March 1983 was fighting each other inside the alliance. This of course leaves even less time to do good work. Furthermore if a neophyte in 1982 can create an ‘economic miracle’ with one budget surely he will be able to do at least as well if he ever returned as Finance Minister later.

The trouble for Bérenger is that he did return as Finance Minister in 2000 and got the chance to present not one but three budgets. And what did Cuttaree have to say about the state of the economy after those budgets? Something very interesting: “Nous sommes en urgence économique. La situation est sans précédent.” It was a period in which almost twenty-three thousands jobs were lost in one industry alone in a few years. Mr. Bérenger of course described the situation differently dubbing Mauritius the best managed country in the world. What else to expect from a party with more than a little penchant for self-aggrandisement?

Knowledge about the economy is not something that the MMM seemed to have got better at since. Reza Uteem, their shadow Finance Minister, was heard a couple of years ago on a radio saying that the offshore sector needs a stimulus package. The MMM has also set saving the dead sugar industry as a top priority in its electoral manifesto. It doesn’t do well on other important national issues either. 

Bipolarizasyon Politik Se En Mit

Dan Lamerik ena li. Parti Demokrat ek Parti Repiblikin. Sa de la tu letan mate ek prezidan sorti depi en sa de parti la. Moris nu pa fin ena sa. Se ki nwena se rekonfigirasyon 4-5 parti dan de lalyans ki sanze a traver letan. Mem an 1967 pa ti vreman ena li parski dan Parti Lindepandans tiena Ptr, IFB ek CAM.

Par kont se kin arive depi 2005 se ki nun retruv nu ek ban Parlman byin regresif ki ti pur reprezantasyon proporsyonel (PR) ek ban politik iltra-liberal. Ptr su Navin Ramgoolam fin trayir ban valer sa parti ki ti lager pu lindepandans ek don nu leta providans. Setadir li pur PR, flat tax kin kas lekonomi ek li pa fin kon byin antur li. MMM usi mekonesab ek nepli ena nanye interesan pu ofer Moris. Ek depi 2015 nun truve ki MSM usi fin vin en parti neoliberal ek fin pratik ban politik bankal kin kontinye kul Moris ek pena respe pu lanatir. Tu sa la fin an parti arive parski ban parti la ena manb infliyan ki ena lintere dan offshore ek zot gayn finansman korporatif inportan.

Bon nuvel se ki lelektora fin kontinye vin pli malin. 

How Our Offshore Treaty Risk Became a Much Bigger Problem

With 640m multidimensionally poor people in India in 2005-6 and the internet making millions a lot smarter it was natural that the pressure to renegotiate the DTAA with Mauritius would increase significantly. So it was sheer stupidity for one bean-counter to flatten our tax structure to a rate (15%) that has caused serious damage to our economy in order to build a facade of low-tax jurisdiction. Besides we never voted for this crap aka Paglanomics or if you prefer Shaitanomics in 2005. Killing our savings culture was not exactly another smart move. Neither was gifting a sunset industry €138m — its weight in the economy was more than six times smaller at the end of 2018 (0.5%) than it was in 2005. Add the severance of the link between what we pay for oil and what it costs on the world market and stupid hire-fire laws to understand why we’re heading into a wall. 

And a few days ago he uttered more rubbish including that without our Global Business (GB) sector — this is where he’s been working for many years — our currency would maybe have been trading at Rs50 to the USD. Scare tactics by Dr. TINAnen. But as the chart shows it took only five years from the inception of that sector for our rupee to lose a quarter of its value and a further five to shed almost another 25% of the average value it had in 1992 — an index of the dollar value of our rupee is used so that when the curve is going down it means our rupee is losing value with respect to the USD, makes it easier to visually estimate its percentage changes and we’ve added two horizontal lines to show two values of our rupee relevant for our discussion here in the format you’re used to seeing it. 

This chart will also help put the myth that Ringadoo was a bad Minister of Finance because he devalued the rupee by 30% and 20% in a better perspective. See our rupee lost 55% of its dollar value between 1992 and 2015 in an economic environment that was incomparably better. In fact we would probably have hit another dismal low had there not been a BoM Governor who knew what he was doing between 2007 and 2014 to resist energetically an incompetent Minister of Finance who when asked why the rupee had been depreciating rapidly replied that it had not depreciated for a long time. For sure current trade imbalances reflect to a great extent the generalised policy-making failure of the past dozen years. Our rupee will enjoy better days as soon as we get our act together. Just like India who had by 2015-6 reduced the number of poor people by 271m.

Voodoo Economist Strikes Again

This is how Sithanen responded to the claim of Roshi Badhain that a couple of directors of IFS shared a billion-rupee dividend without paying any taxes on it:

"Les deux actionnaires sont Couldip Basant Lala et Kapil Dev Joory qui sont deux entrepreneurs qui se sont sacrifiés pour le développement du Global Business à Maurice. Quel est le mal si aujourd’hui ils sont financièrement récompensés pour leurs investissements?"

What's wrong is that the stupid Sithanen tax-cuts have not generated the 8% growth he promised in any of the 11 years they were supposed to leading to a GDP gap which should reach Rs1.2trn when we welcome the new year. What it has also generated is the smallest share of the national cake in two decades for more than two-thirds of the population. As Government needs money to make sure social mobility is alive and kicking and for so many other things it would have made perfect sense for it to have taxed this dividend at 25% leaving the two directors with Rs750m to split among themselves.

Contrast this stand to two interesting statements he made before. The first one was when there was an uproar about the degradation of the environment in a neighbourhood of QB because of a casino. He was heard on radio stating how much money gambling brings into the state coffers -- I think he mentioned something like a billion -- and asked where else we would get the money. That's of course after slashing tax rates to build a facade of a low-tax jurisdiction.

The second statement happened in the midst of massive deposit withdrawal when he started taxing interest income and upsetting the financial plans of thousands. This time he was heard imploring depositors to show some patriotism. That is to keep their hard-earned savings in the banks and get taxed. What did Samuel Johnson say about patriotism again?

Take Agalega, Leave DTAA Alone

Seems to have offered Mauritius according to an article published in the Times of India a little while ago. What's going on here? First policies to attract unproductive FDI are implemented for seven years. These fail miserably and we end up with a lot of debt and structural problems. Now, we're giving away our territory to save a treaty?

DTAA, India and Mauritius

So thanks to the intervention of our PM the application of GAAR has been postponed by a year. And India wants to renegotiate the DTAA because it is saying that it is losing too much tax revenue and because some are abusing it. Essentially bringing our agreement to the same level as the one it signed with Singapore.

What do you think?