Showing posts with label Voodoo economics. Show all posts
Showing posts with label Voodoo economics. Show all posts

Monday, September 29, 2025

Yen Statements That Don't Survive A Fact-Check

1. BRP eligibility at 60 years was an anomaly that had to be removed (2025). BRP is an important component of our welfare state which keeps 1/3 of Mauritians out of poverty. If you postpone the age people start getting it you will create a lot of poverty and hardship just like the 2012 HBS showed us voodoo economics had – an extra 22,000 people became poor over the preceding five years – and slow down the economy because a lot of these monies are used to buy essential things which keep the economy healthy not villas 99% Mauritians cannot afford.

2. It's shocking to see that we spend 90 billion rupees in the budget on social security while spending only 20 billion on education and health each and about 10 billion in other sectors (2025). Our economy at the end of 2024 was 2.3X times smaller than what Sithanen said it would grow to when he introduced his ruinous 15% flat tax in 2006 so it's not a big surprise that several of our budget items are a lot smaller than they ought to have been. Granted the BRP increased a bit too quickly during the last 10 years but if the economy had grown as Sithanen said it would with a very unfair share contribution from the wealthiest and we spent the same shares of GDP as the Seychelles then we should have spent 3.5X more on education than what we've budgeted in FY25/26 (Rs80.1 billion instead of 22.8 billion) and 5X more on health or 93.2 billion (instead of Rs18.5 billion).


Thursday, July 14, 2016

Will the Budget Be a Non-event?

"On ne parachute pas au ministère des finances quelqu'un qui ne sait pas calculer la dette publique et qui ne connaît pas l'impact de la fiscalité sur la croissance...."
Rama Sithanen, 2009

Like last year's and most of the budgets since 2006? Well, it doesn't have to. It will essentially depend on a single decision. But first let us understand how we got into a deep mess for ten whole years.

Old Policy Crap in New Bottle
The last part of the quote above – emphasis mine – summarises pretty much the main economic story from Mauritius over the last decade. While tax rates definitely impact growth rates – and both of them drive government revenue – the relationship is far from being linear. And it depends to a great extent on the relative ability of our public and private sectors to create wealth or make things happen. In the 1980s for example, as Paul Krugman reminds us, American top tax rates were cut from 36.5% to 26.7% over nine years but they never got the growth rates that would have financed those cuts. What they did get though is a Federal debt ballooning all the way from less than a trillion dollars to four by 1992. And two decades later US politicians were trying to clinch a deal hours before Uncle Sam was scheduled to go into default. The Economist summed up the situation as essentially the product of two tax-cuts, two wars and one stimulus package.