Platform Komun Syndikal Fin Ekrir A Ban Parlmanter

Dan en let sinq paz, zot fin explike, sif a lapwi, ki BRP e nu welfer steyt sutenab me seki pa sutenab se sa pwazon de flat tax 15% ki Sithanen ti servi popilasion apartir 2006. Zot fin dir ki rasio BRP/GDP ki fin okip deba piblik dernie 13 mwa pu bese ek en BRP de 100 milyar rupi an 2035 pu tu to krwasans aniel mwayin siperyer a 2.2% ki en to vreman insinifian konsideran potansiel Moris.

PKS fin osi expos dega katastrofik ki flat tax 15% Sithanen in fer a Moris depi 2006 e kuma sa fin fer an sort ki nu lekonomi de fwa edmi pli tipti ki seki li bizin ete an 2026.

PKS fin osi fer plizir propozision pu ogmant reveni guvernman e fin termin let la par dir ki zot ti va prefer ena ban konsiltasion sinser ek guvernman e fer ban parlmanter remarke ki laful dan manifestasion le 11 Ziyet 2026 dan Por-Lwi in fini vot pu en lagrev zeneral.

U kav lir let la isi.

Sithanen Toohrooh Crosses £100 Billion

Recall that the Sithanen Toohrooh (ST) is the cumulative difference between the GDP that was supposed to be generated by the 15% flat tax and its actual number. Given that we never grew at the expected 8% rate promised by Dr. TINAnen during the past nineteen years – average growth rates between 2006 and 2024 is 3.4% or less than half the target – except in one year and that too only because the economy had contracted by nearly 15% in 2020 due to Covid it has steadily been increasing since 2006 and together with some of the most catastrophic policy decisions ever have fairly disintegrated our great and beautiful country. So much so that the ST reached Rs6 trillion in 2024 rupees a few weeks before voters produced the third 60-0 of our post-independence history.

Clearly and as the chart confirms most of that GDP gap happened on Pravind Jugnauth's watch (almost 78% of it) with SAJ accounting for 8.5% (Roshi Bhadain was in government during this time) and Navin Ramgoolam 13.5% of the total. For ease of calculation this breakdown assumes that SAJ, PJ and NR took over at the start of 2015, 2017 and 2025 which is not exactly a lot of violence to the facts. To be sure the shape of the chart depends essentially on the tax structure and given that all three PMs since 2006 have stuck with one that was unsustainable and overall very regressive it would not have made a big difference if the order of their stints was altered. It would still have been 20 years of extreme voodoo economics or if you prefer Shaitanomics.

The annual £90m we've apparently been contemplating to receive for the Chagos Islands will not matter that much even with the front-loading because it will be inconsequential compared to the ongoing damage caused by the ruinous tax structure. The current PM who wanted a fourth term so as to leave a legacy – it's atrociously negative after three just like PJ's is after eight years as PM – should have presented a budget at the end of last November or early December with a sustainable tax structure to dramatically slow down the fiscal rot and let Mauritius start being Mauritius again. This would have prevented the ST from increasing by about another Rs500 billion by the end of next month and NR's share of the mess to 20.4%. Add another half a trillion rupees till the close of 2025 if the June 5th budget keeps the same regressive and ruinous tax structure and see Ramgoolam's share of the ST rise to 26.2%. More if the new doses of voodoo economics in ADC's electoral manifesto are implemented.

Of course the Rs6 trillion ST translates into Rs1.2 trillion of revenue missing in the government coffers – which would have meant zero public debt right now plus Rs500 billion growing in a nice sovereign wealth fund if all we could have managed was the preservation of capital – assuming the latter accounts for a conservative 20% of national production and a private sector GDP shortfall of Rs4.8 trillion.

For sure the mile wide support the government received six months ago was only inch deep and that in many fields Mauritius has been in junk territory for many years. If common sense doesn't make a big comeback in a few weeks the risk that the social elastic will snap will keep on increasing from its already and unnecessarily very dangerous level.

Bug Kin Eklat Depo Minisyon Pe Dir Mank Lapud Dan Fizi

Tan sa inpe. Pa komik sa? Inpe pli lwin li dir bizin fer kitsoz fuka. Be pa sa mem lin fer a partir 2006?

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? 

Flat Tax to Cause Rs78bn Hole in Treasury This Year

Because we’re definitely not getting the 8% growth rate promised to justify maintaining the destructive 15% uniform rate. Which would explain why we’ve hit a new low in the exercise of our sovereignty. And things will get worse every year with the shortfall rapidly rising to Rs136bn by the time we vote again in 2024. This means a cumulative shortfall of Rs528bn for the next five years bringing the total since this folly started in 2006 to Rs882bn. 

This leaves very little time for Mr. Padayachy, the new Finance Minister, to bring back our public finances on a more sustainable track. A new budget this month would help prevent his political career from going into free fall. 

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.

Breaking Down the 2014 Electoral Defeat

We use the 543,667 votes shortfall that would have generated a 60-0 victory for the LP/MMM alliance and combine it with the five reasons we identified for the loss. If we assume that they were equally important that is bringing Sithanen back had the same effect as a dose of proportional representation (PR) or the Rs540bn GDP shortfall – aka Sithanen Toohrooh (ST) – caused by the ruinous Sithanen flat tax that had accumulated by the end of 2014 then each one of these factors set the losing alliance back by 108,733 votes. To get a sense of these numbers we need to remember that Pravind Jugnauth lost by 38 votes in 2005 while Navin Ramgoolam tasted defeat because of 3,496 votes in 2014.

Why Savings Collapsed Despite Surviving Three Intense Cyclones

Essentially because a bean-counter started taxing bank interest as he needed to find other sources of government revenue after he reduced top tax rates before flattening the tax structure to 15%. The flat tax was supposed to generate growth rates of 8% every year since 2006 but as we’ve clipped rates far lower than this – 2019 will be the ninth year they are under 4% – savings, as expected, have never recovered. 

As the chart shows this is very different from the rebound we experienced after Danielle, Gervaise and Claudette visited us. Removing the battery of exemptions that a whole nation had used to patiently craft their long-term financial plans over several decades and the record inequality the unsustainable and crazy tax policies created didn’t help either. But there was more than injury. 

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. 

Nation Split Over Which is Worse

Is it his stupid flat tax which has broken the economy and created a Rs1,500bn GDP gap at the end of last year because we never got the 8% growth he promised for the past fourteen years or his ethnic electoral model which he used to forecast an 80% vote share for the LP/MMM alliance in the 2014 general election? While the problems created by his crappy economic model have partly been discussed not enough has been said of that ‘40%+40%=80%’ prediction of his faulty model which he no doubt used to change constituency — anybody thinking of changing ridings these days should avoid it as plague — and in the process elevated the status of reading tea leaves to that of an entirely respectable trade. 

The chart is a modest contribution to fill this gap. As you can see the bean-counter has made an error of 846,273 votes. That’s more than the 785,645 votes that alliance actually got. Which means that 40%+40% turned out to be equal to 38.5% — the thought of him being Minister of Finance again must have sent shivers down the spine of many voters. So the red/purple team got less than half what he predicted. It looks a lot like the GDP growth rate we’ve been clipping for the past seven years. They have all been less than half the 8% target. Is there a pattern here? Maybe. Maybe not when we look at the collapse of our savings rate. In any case 846,273 is a huge number of votes. It’s at least 400,000 larger than the votes that made us an independent country. In fact it’s even greater than the votes of the Independence Party and the PMSD in the August 1967 election put together. He’s now saying he got misreported and never said that. Even if we grant him this just for now I recall hearing him say that he’s predicting a 60-0. This implies a vote share of a little more than 65% (the vote share of the LP/MMM in 1995) and a still gigantic error of 543,667 votes. 

If you ask me I don’t think it’s important we decide which is worse. These are both catastrophes that need to be analysed carefully and prompt voters to require political alliances to have their tax policies among other things detailed in affidavits. They should also help us stay alert and not get distracted by the ethnic hogwash that’s going to be thrown our way in the next few months. Let’s stay focussed on the real issues. There’s no shortage of them. 

The Wrong Budget Tomorrow and the Sithanen Toohrooh Rises By Rs338bn

To Rs1,781bn by year-end when we could be voting. This would increase the government revenue missing with respect to the reason for flattening the tax structure to 15% – getting 8% growth – by a huge Rs68bn. This is likely to be more than 50% of the budgeted revenue announced tomorrow. Or if you prefer the equivalent of 97 eye-hospitals without playing with our sovereignty or a quarter of the central government budgetary debt at the end of last year. Or more than three Lepep trams. Voters understand that indiscriminate tax breaks is an illusion and will only bring us way too close to a massive social crisis. 

Putting the Flat Tax Mess in Perspective

Let us assume that we halve the average 8% growth rate target in 2008 and we reduce it by three quarters in 2009 to account for the Great Financial Recession. That’s a pretty conservative assumption because an average growth rate takes into consideration years that are below average. Let us also assume that the government revenue shortfall generated by the Sithanen flat tax for each year — you’ll have one for any given year if the actual growth rate is less than 8% — is reinvested at a rate equal to the rate of inflation until the end of 2015. Again this is a fairly conservative assumption. 

Then at the end of 2015 the reinvested cumulative government revenue shortfall (RCRS) would have ballooned to Rs114bn. That’s 95% the size of the National Pension Fund at the time. Basically another NPF which would have allowed higher benefits to be paid or from an earlier age or some combination of the two. That would have been concrete proof of an ‘early harvest’ or a ‘bumper crop’. But that’s not the situation we’ve been in. Instead government has been trying for many years to target pension benefits. Rs114bn is also about 70% of the cost of a mass rapid transit (MRT) aka heavy metro system. We don’t need this system for now just like the Lepep tram but we would have been able to afford one. Rs114bn is almost half of our public debt at the end of 2015. This would have given us a better credit rating or at least a more favourable credit outlook. Rs114bn is also exactly six times the cost of changing all the leaking pipes of the CWA. 

But this was in 2015 and given that the Lepep government has maintained the regressive policies and added a few of its own the shortfall has kept on increasing and compounding. Three years later it had exceeded Rs300bn. 

Sithanen Flat Tax Fuels More Street Protests

This time it was in Curepipe. Citizens were outraged that they've been without running water for up to two weeks. But what else could we expect when regressive tax policies have crippled government so much that it can't even pay for its own eye-hospital? And things will get worse as long as we remain on the wrong side of compounding. Boolell was there trying to score some cheap points -- the government revenue shortfall between 2005 and 2014 was big enough to change the 1,600km of leaking pipes at least five times over.

24/7 water is unlikely to happen when Collendavelloo completes his first term as Minister in the next few months. This is kind of obvious. See, when he took over about 45% of households enjoyed an all-day supply and this week he said it had reached 70%. So if it took 4 years to increase the percentage of subscribers getting round-the-clock water by 25 percentage points (by probably changing around 730km of leaking pipes) it will surely take more than a year to add the last 30% subscribers. Even if the Bagatelle dam comes into operation soon. In fact on the current trajectory 24/7 is not happening before the 2024 election year. Which is a good reason to put as much pressure as possible on government so it brings back some sanity to our tax structure. Because we surely don’t want 400,000 people to have water problems for another 4-5 years.

Public debate on this matter can also be enhanced if the Minister puts at least three very basic series of data on the CWA's website (the last annual report available there is for 2015). These are the length of the water network at the end of each year and the length and cost of pipes laid each year since the end of 1967. 

Piti Depas Papa

A la fin 2018 par Pravind Jugnauth (PJ) dan toohrooh Sithanen* ti 551 milyar rupi. Sa ve dir plis ki 125 milyar rupi par SAJ. Anfet par PJ ti osi depas rekordman ziska ler, Navin Ramgoolam (NR). PJ fin pran kat fwa edmi mwins letan ki NR parski zintere manz kapital apre en sertin letan si u pa fer seki bizin. PJ fin kontinye ek ban politik tre regresif ek insanse kin kontinye min enn lekonomi ki Sithanen fin tuye. Plis lor la biento.

*Toohrooh Sithanen se mank a gayne dan prodiksyon nasyonal konpare a en krwasans 8% ki Sithanen ti dir nu pu gayne ler li ti met flat tax 15%. Pu kon mank a gayne dan lakes guvernman u nek ena miltipliye toohrooh par pwa guvernman dan lekonomi. Dan mo ban kalkil mo abitye pran 20% bien ki pwa la zordi li 25%.

5 Reasons Labour/MMM Alliance Lost in 2014

1. Attempt to shift to a semi-presidential system for funny reasons without asking for voter permission in a referendum

2. Adding proportional representation (PR) to our electoral system – that would have created a lot of political uncertainty, bloated an already too big parliament and snatch a powerful weapon voters have – without getting our green light in a referendum first

3. Bérenger as PM – the guy who has only been able to win internal party elections for the past 18 years with his on/off antics and was far from being an impressive PM during 21 months

4. Sithanen – the bean-counter who killed our savings culture and introduced the economy-killing flat tax – as FM 

5. Impact of trickle-down economics (at least Rs540bn of GDP and Rs108bn of government revenue missing at end of 2014) that is Ramgoolam putting the 1% first

And what do you think are going to be the important factors in the next general election?

2018: The Year in Review

Q1: Lepep Tram will not be biggest project ever. By-election hints at how return to 40 SMCs would make our democracy more vibrant. Error found in app of Electoral Commission. Reconstruction of great party cannot happen while he's there. Two Nobels didn't get Mauritius wrong. Sithanen toohrooh will grow by Rs300 billion if sanity not brought back to our tax structure. Mauritius turns 50. PJ announces resignation of President, latter has other plans. Calculation of Sithanen toohrooh explained. Road fatalities in Singapore fall by 14%. Next general election is going to be a lot more open.

Q2: Sound management explained. Chuttoo thinks Ivan wants to be kicked out government. The best Kreol dictionary in town. Why we shouldn't legalise pot. Is recruiting at the CEB biased? Recall elections are seriously overdue. More than 30% of World Bank reports never downloaded. Big electoral imbalances almost never last. 24/7 water for all should happen within five years. Putin begins last term with brand new car. Why creating the URA was a mistake. Wasn't 2018 supposed to be the year of the second 'economic miracle'? Some days are way better to present the budget. SEG has at least two more flaws. Another budget to nowhere. Only idiots will love Mars.

Q3: Water is a great role model. When will NASA go to the moon again? Weighing an elephant is no easy task. Sadhguru explains how India is different. Politician taking us for morons. Looks like something is brewing. That sugar has no future has been obvious for more than a decade. 10,000 Yankees died from cocaine addiction in 2016. Sharks want appointment with Minister. World listens as story of Chagos told at the ICJ. Road fatalities may hit all-time record this year. PM makes URA redundant. A framework to analyse decolonisation.

Q4: Pravind al lapes rekin ek enn lapipi danzere. Canada rejects proportional representation. Marx at 200. Shelina eksplik kuma fer zasar lisu. How important is ethnicity in deciding elections? Our roads killed 6,716 in 50 years. Although it promised several one referendum would be a great start. Mauritian voters are quite mature. Why politicians want a dose of PR. Why we lost two decades on electoral reform. Division of votes should become standard parliamentary practice. Doing Business is a misnomer. PM presses ahead with plan to make us a banana republic. Worse than termites.

Our Constituencies Should Be Unpaired Back

To how they were in 1959 and 1963. That is 40 single-member constituencies (SMC) for Mauritius – we should add two for Rodrigues. It's ok for now that some are much larger than others. That's not a national priority. What is is to have very competitive elections in every riding and move away from such nonsense as "si zot anvi minis vot 3-0" and God knows what. We've seen how interesting the last by-election in no. 18 was. Plenty of good debates and surprising results. Let's face it, voters are becoming smarter every day. For example I was surprised to see that many people now fully understand that the flat tax had already caused a gigantic shortfall – a toohrooh of more than a trillion rupees at the end of last year. This is very promising for the quality of our debates.

Given that voters look set to connect a lot more dots – two are more casinos in city-centres = more drugs in school and elsewhere – the Electoral Boundaries Commission should do the spadework to allow a reversion to our setup of SMCs because they're coming back. Sooner than we think. The other big advantage of having 40-odd SMCs is that they would enable same-day results – with a likely winner announced on national TV around 8pm – as there would be three times less votes to count. This would cut the overall cost of a general election substantially.

How To Calculate The Sithanen Toohrooh

I am writing this following a suggestion to talk a bit more on the infamous Sithanen toohrooh. A good idea given that it is the product of the worse thing that has happened to us after slavery: the Sithanen flat tax. I started posting about the toohrooh almost seven years ago. And I can't think of a better way than to explain how I estimated it. So people can play with the numbers and understand how we've been taken for a destructive ride.

Actually you need very little data to compute the toohrooh: real GDP growth and nominal GDP. That's it. These are in the 2nd and 3rd columns. We'll show the computations for 2006 but bear in mind your numbers may be slightly off because of rounding error. Nominal GDP growth is computed from nominal GDP numbers of adjacent years. For example the 11.52% is obtained from 213,444/191,393. Implied deflator is a measure of inflation and is the ratio of the nominal GDP growth to the real GDP growth. That is we got the 5.61% from 1.1152 / 1.056 – a more precise calculation than simply subtracting real GDP growth from nominal GDP growth.

Growth needed is the robust 8% real growth promised by Sithanen for slashing our already low taxes grossed up by the implied deflator. We have to do this because GDP and government revenue numbers are computed in nominal terms. So far so good? So growth needed for 2006 is 14.06% (1.08 x 1.0561). With the last number we can get the nominal GDP compatible with an 8% real growth rate. This turns out to be 218,295 or 14.06% higher than the 2005 number. This is 4.851 billions more than the actual nominal GDP of 213,444 and it produces close to a billion rupees of revenue shortfall for our government for 2006 alone if we assume a very conservative government revenue to GDP ratio of 20%.

The numbers for the other years are calculated in a similar fashion. And we've added two cumulative columns to show how the size of the toohrooh has been growing for the past 12 years. As you can see the toohrooh closed 2017 at Rs1.2 trillion and will grow by another Rs300bn this year. You will surely realise that the cumulative revenue shortfall at the end of 2015 was already about enough for Mauritius to get herself a heavy metro system not the junk that's bludgeoning the Promenade Roland Armand.

On dit merci qui?

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.

Two Nobels Were Not Mistaken About Mauritius

Kot zot pu kav vo nu bann dirizan sa!

Camille Moutoo at a SELEX dinner

Certainly not James Meade who submitted his famous 1960 facts-based report a few months after visiting Mauritius. Incidentally he landed here exactly eight years before 12.3.68 and about ten days after a pretty little thing called Carol had spent five days checking us out. Start to read the clear report and it won't take you long to appreciate – if you'd been led to believe otherwise – how bad a hand we had been dealt five decades ago. You might even then be able to connect the dots and understand that he and his team were proved wrong by a group of exceptional men and women who saw far and loved this land of ours like nobody did since.

Likewise Vidia – the V in V.S. Naipaul – made some really sharp observations about Mauritius. The kind of insights that would make the day of any policy wonk whether it was in 1973 or forty-five years later. Don't like it too much that he called us an Overcrowded Barracoon? Well, we had one of the highest population densities in the world back then – we still do sitting at no. 007 – and you've surely not forgotten what are the two things Malcolm said we grow here. As a matter of fact it would be far too generous a compliment if someone used these two words to describe us today. Given how much we've regressed.

And then there is Stiglitz who found that everything was going on swimmingly in our island. His 2011 visit occurred a few years after a toxic bean-counter had done extensive damage to our economy and to the lives of thousands with his flat tax and reverse Midas touch. The massive irony of course is that Joe was part of the successful economic team of Bill Clinton who had reversed the harmful tax cuts of a bunch of Voodoo economists led by one Ronald Reagan and the first Bush President – this had caused US debt to balloon from $1tn to $4tn in twelve short years.

The least he could have done was to share his experience and recommend that we make an economic about turn. After all the Sithanen toohrooh had grown to Rs116bn by the end of 2010. A huge amount roughly equal to our GDP for the last six months of 2006 but only one tenth of the level it reached last December. But he didn't preferring to put his foot in his mouth and spraying us with excessive doses of flattery. I don't think this made him gain any new fans among those who had raised at least one eyebrow when he got that prize – which is as old as our independence – from the Swedish central bank.