Pena Deba Pu Fer Lor BRP Iniversel a 60 an

Amwin mank rol u pena oken problem pu regle dan pei.

Anu Redemont En Argiman Bidon Ramgoolam

Depi en sertin letan li pe dir ki si pa ti repus laz ki kumans tus BRP a 65 an be BRP ti pu kut 100 milyar rupi an 2035. Mo ti tan sa promie fwa dan so diskur pu kongre 90em laniverser Ptr. Zordi mon truve ki ena usi sa palab la dan so steytmint le 17 Zin 2025 dan Parlman. E lin redir sa fek la. Se en argiman ki mo ti osi demoli dan Preokipasion Sitwayin, en liv ki ninport kisana kav dawnlod gratwitman. 

Be kuma tiart la montre si depans BRP pu pas de 55.3 milyar a 100 milyar dan 10 an se en ogmantasion de 80%. Me li bon kone ki dan le pase nun gayn ban ogmantasion lor 10 banane buku pli inportan ki sa. Par egzanp BRP ti ogmant par 540% ant 1987/88 ek 1997/98 e 170% ant 1997/98 ek 2007/08 ki inklir ban period kot Ramgoolam ti PM. E malgre sa ban ogmantasion buku pli inportan la zame BRP ti depas plis ki 2% GDP. Si li ti 7.8% GDP an Zin 2025 se akoz ti servi li kuma en zarm elektoral dan omwin 3 eleksion e sirtu akoz zame nu pan gayn krwasans mwayin de 8% ki Sithanen ti promet ek so flat tax 15%. Anfet de 2006 a 2025 mwayen krwasans ti selman 3.3% e sa fin fer an sort ki lekonomi apepre 2.5X pli tipti ki seki li ti bizin ete.

An pasan kifer u kwar zame Ramgoolam koz lor to krwasans mwayin depi 2006?

7 Alternativ A Ras BRP Depi Dan Labus Pansioner

Sanjay Jagatsingh · 7 alternativ a ras BRP depi dan labus pansioner

Boss Has A Message For Us

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? 

Mauritius Should Showcase the Sithanen Flat Tax Hell

We should make sure all 50-odd African countries are in attendance along with two university buddies. Then bring up the above table on the screen while a fresh round of gato-pima is served. And explain that by the end of last year Mauritius had about Rs1,800 billion of GDP missing compared to what the 8% growth the flat tax was supposed to generate – that’s 36 times how much GDP is roughly expected to fall this year from where it was at the end of 2019. If we assume a very conservative 20% cut for government revenue and the monies are left in a drawer (they are not reinvested) then there is more than Rs350bn of government revenue missing. This could have been placed in a sovereign wealth fund (SWF) that would have easily got us over the bump in the road that the pandemic is now creating. 

But we should have increased the share of government revenue to the OECD average of 35% as our population has been aging since 2005, to improve our welfare state and to bring back retirement age to 55 years so we mitigate our serious brain-drain problem. This would have boosted the SWF to Rs623bn. Even if we had grown at 6.5% over the past fourteen years there would have been between 195bn to 342bn rupees available to prepare us for any tough situation. Why is 5% in the table? It’s our average growth for the fourteen years – a period of progressive and sustainable taxation – before Sithanen started screwing up the economy and Mauritius big time. So even in this worst case scenario there would have been Rs58bn-Rs101bn of extra government revenue available for a bad year like 2020. Without compromising the independence of the BoM, destroying our savings culture and sending our rupee into a tailspin. 

Minister Padayachy has increased personal top tax rates to 40%. He had little choice. We don’t want to have a massive social crisis. 

Padayachy’s Obsession With Doing Business Could Prove to Be Politically Fatal

I mean Sithanen slashed top tax rates to get 8% growth and introduced the Doing Business Index (DB) as some kind of economic holy grail. When we never got the higher growth rates he told us it’s the fault of the Great Recession but they’d be on their way as soon as it ends. That downturn ended almost eleven years ago but still no trace of the 8% growth. In the meantime we’ve been bombarded with useful idiots presenting 3% growth as good. Even if it’s less than half the promised target while the country has been falling apart.

And Padayachy doesn’t talk about the 8% growth required to keep the regressive tax rates at all. He instead shifts our attention to the DB rankings trying to convince us that they are so important that we should aim at a top ten spot – we’re currently at the 13th place – and even a top five position. That would make sense if changes in the DB index were strongly correlated with growth. But as the chart shows they are not. At all. At least for us.

Now that the pandemic is here we’re all seeing how vulnerable the flat tax has made us and how close to bankruptcy our country is. 

Another Reason Why Doing Business is Wrong Target For Mauritius

Two Governors and A Rupee

How to Burn Billions

Why the Dutch Are Smart

Did Trickle-down Economics Work in Mauritius?

Issues That Will Decide the General Election

Fact-Checking A Few Sithanen Statements

He said recently that his flat tax had increased government revenue by 20% in the first year of its implementation, that it had attracted a lot of investments from abroad, produced growth rates of more than 5% and had created 10,000 jobs per year. 

1. Government revenue may increase if growth is better or if you increase the tax rate or tax more things. Growth had increased in 2006 because the economy rebounded after the big textile contraction. He should tell us by how much revenue increased in every year since his flat tax was implemented. Besides the main reason to slash top tax rates to 15% was to get 8% growth rates. As chart shows we never got those growth rates even in the decade following the end of the Great Recession – just check how many consecutive years we didn’t even get half of that. And this will cause a government revenue shortfall approaching Rs360bn at the end of the year. 

2. We surely got a lot of FDI (Rs189bn between 2006 and 2018) but this pales in comparison to the Rs570bn savings missing after he killed the savings culture. And the FDI has mostly been speculative ensuring that thousands will not be able to become home-owners. 

3. Finally what kind of jobs are we talking here? Definitely not good jobs. Otherwise growth rates would have been higher, savings would have rebounded and there would never had been the need for the controversial stimulus package.

Was Lepep’s Growth Performance Better?

Flat Tax Hands 750,000 Mauritians Their Worst Share of National Cake

This is something the Gini coefficient won’t be able tell you but the above chart will. So yes, the bottom 60% of Mauritian households have been made more vulnerable by the Sithanen flat tax in the first decade following its implementation creating record inequality at the same time. They had their best shares of the last twenty-five years a quarter of a century ago. Plus we need to remember that since 2006 we’ve been producing some of our smallest national cakes ever thanks in large part to the damage done by the same unsustainable tax structure. Which means 750,000 of us got our smallest share of the tiniest of cakes. Not exactly what you’d call resilience. More on this later.

Another Pope, Another Mauritius

When he visits us tomorrow, Francis will find a Mauritius that’s very different from the one that greeted the most travelled Pope ever, John Paul II, thirty years ago. As the chart shows we’ve regressed in all but two ways. The cake produced over the four years before Monday’s trip (cake increase) is almost two-and-a-half times smaller, savings have collapsed, rupee has lost more than half of its value, road fatalities over the last four years are about a quarter higher and unemployment two times bigger. Inequality has also increased substantially. More on this later. 

Many of the problems we’re facing can be traced back to the 15% flat tax which has placed public finances in a critical position. Indeed at the end of 2018 there was Rs1.5tn of GDP missing which should have generated Rs300bn of revenue for our government. This would have made the latter debt-free. No wonder then that there’s plenty of signs we’re in big trouble the latest being that more than 50% of the vehicles at our fire stations and pumps don’t work. This shouldn’t be a surprise for Francis who has stated publicly several times that trickle-down doesn’t work. Let’s see what he says while he’s here. 

Sithanen Toohrooh To Increase By Over Rs300 Billion in 2018

That's based on the 8% growth he promised back in 2006 before flattening our tax structure. We never got the 8% in any of the 12 years since he started breaking the economy with so much dedication. In fact we didn't get half of that rate in eight of these years and we haven't clocked 4% in the last seven consecutive years. It's true that he had also promised to make poverty history by 2015 back in 2007 only to recently push back this date to 2026 or 2031. I know people who have started to believe in astrology after listening to his forecasts. Mind you that was before he predicted a 60-0 for the general elections of December 2014.

300 billions is our GDP for the whole of 2010. That's the equivalent of 15 Lepep Trams or very roughly two $5bn Mass Rapid Transit (MRT) systems – the heavy-duty underground. Given that the toohrooh was Rs1.2tn at the end of 2017 it will therefore hit a trillion-and-half rupees before we welcome an election year.

Simple Tools To Evaluate Political Projects (4)

Let's bring back the income distribution data from the previous post.

Income share in % 1986/7 1991/2 1996/7 2001/2 2006/7 2012
Bottom 20%              5.6      6.4      5.9      6.2     6.1      5.4
Top 20%                  44.2    43.5    46.2    44.8    45.6    47.5
Ratio                         7.9       6.8      7.8      7.2      7.5      8.8

After Bheenick and Bunwaree had reversed some of the damage of policies of Sithanen, Berenger and Pravind Jugnauth reduce slightly the share of the bottom 20% while they increase that for the top 20% by 0.8%. Finally after the first five years of the Sithanen flat tax the weakest 20% households see their share fall to at least a 25-year low while the top 20% hit a record level of 47.5% after they get an increase of 1.9%. There is little surprise then in seeing the share ratio reach a record 8.8X.

So each time Sithanen has been Finance Minister inequality has increased. After his first stint the top 20% saw their share rise by 2.7% of GDP and his flat tax has handed this group another 1.9% in 2012 while the bottom quintile have seen their share fall by 0.5% and 0.7% after his stints or toxic policies were implemented. Lutchmeenaraidoo, Bheenick and Bunwaree on their side have reduced inequality when they were Finance Minister. At this point in time it is useful to have another look at the different cakes that were baked.

We can see that not only the biggest cake was produced by Vishnu in the five years ending in 1992 but the sharing was also the best for the bottom 20% as they grabbed a 6.4% share. Compare this to the smallest share of the bottom 20% and one of the smallest cake produced in the first five and half years of the Sithanen flat tax. There are other interesting conclusions you can draw from combining these two data sets. Have fun. We'll return with a few more tools.

Simple Tools To Evaluate Political Projects (2)

In this post we look at the size of the cake which is the one of the two parts of the political project as we defined it in the first post in this series. We can have an idea of the economic cake that a government will generate if we analyse what politicians say, have in their electoral manifesto and have said and done before. We can also look at 5-year periods as it is the frequency at which the very interesting household budget survey (HBS) is carried out. This is done in the following chart.

The 8.5% led to the first 60-0. It's an interesting period where one cyclone wiped out two years of progress. Don't think voters were able to separate this from the skill level of the government they had at the time. The years 1982 to 1992 were free of major natural calamities, benefited from the great work done in earlier periods and happened in a very favourable international environment. That gave us the two biggest cakes of the thirty-five-year period.

The cake contracted by about 10 percentage points over the following ten years -- during which the second 60-0 happened -- and another 5 percentage points between 2002-07. The consolidation of our textile industry occurred in the latter period. Finally the last period is the first 5 years of the Sithanen flat tax. Pretty small numbers given the 8% growth that was promised to trickle down. 8% growth over five years is a cake that increases by 46.9%. This has contributed to a GDP gap of Rs269bn by the end of 2012. A cake smaller than expected of course translates into governments that get less done and increases the odds of getting booted out of power.