Interview:
Anil Gujadhur
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“If
we make the wrong policy choices, we may with some chance be
in the future what Haiti is like today”
*
“Govt can always repair economic decisions so long it
doesn’t sap public confidence”
*
“Reform can be re-orientated, recalling that the economic
agenda comes to an end where the social agenda is not a well
thought-out part of it”
Anil
Gujadhur, former Deputy Governor of the Bank of Mauritius
and Chairman of the Financial Services Commission, was
invited to give his views to MT on a wide spectrum of live
economic issues this week. With his deep experience of
the financial sector and his refreshing out-spokenness, he
states that Mauritius can progress much more if it manages
to break from insularity, including in its mode of thinking.
He throws valuable insights on what the next steps could be
to extricate ourselves from a potentially difficult forward
economic adventure…
Mauritius
Times: What if you were to be told that the forthcoming
Budget of Minister Sithanen could be the last of the present
government’s mandate? Sounds far-fetched from the
political angle, but how would you react from an
economist’s perspective?
Anil
Gujadhur:
I don’t know who has made this prediction and under which
assumptions. In plain language, this view assumes that the
harm done by the previous budget(s) is so much beyond repair
that no matter what the new proposals are going to be (and
we don’t know what they are going to be!), they would be
of no avail to set matters right.
I
doubt that the Minister would have come to such a pass or
that the Minister has come to such a point of no return that
he cannot now get his act right. A re-balancing is always
possible in economic matters. Even at the far end of his
mandate, President Bush is still trying all he can to whip
up consumer demand to mitigate the effects of recession in
the US and it is widely acknowledged that the biggest
failure of the Bush administration has been on the economic
chapter. Chancellor Darling of the UK has been busying
himself lately, reversing certain recent tax proposals that
have had the effect of taking the shine away from Gordon
Brown. Yet the latter was till lately being credited with a
stellar performance as Britain’s chancellor for over a
decade. He is now in free fall. You can always repair
economic decisions so long you don’t sap public confidence
in you.
A
budget can be an instrument for achieving two objectives at
least: bringing about a redistribution by way of taxes and
expenditures so as to obtain a reasonable social balance
between those who are well-off and the less well-off, and,
secondly, setting down an inclusive and solid platform for
sustainable future growth. Its path can be wayward enough
from one budget to the other so that you can right the
things that you did not do so well before, learning from
experience. The main shortcoming of local budget policies so
far relates to insufficient focus on the micro-management of
its effects. Many people feel let down by a continuous loss
of purchasing power due to rising prices which, you will
recall, before the recent rise in prices of essential goods
at the global level, were being fuelled by the rupee’s
pronounced depreciation in 2006. The budget has to ensure
that this process does not continue to sap the morale of the
population. Is this an impossible task? If yes, the
assumption behind the prediction is right. If not, the
situation may be turned around.
Having
said this, unless we know what exactly is in store with the
next budget, we cannot in advance call it a lame duck and
write it off. I prefer to reserve my judgment.
Looking
at the prediction you mention from another angle, it begs
another question: assume that the prediction made was
correct, who then will present the budget just after? Is
there an alternative credible coalition of views strong
enough on what the future budget should be heading for,
other than cashing on the current failings, which spells out
the difference those views will make compared to the present
state of affairs? I don’t recall something to this effect.
A vacuum will not help.
*
Economic reforms do not always make a government popular,
and Minister Sithanen could well have said to his colleagues
that his “budgetary proposals
over the last two years make lousy politics, but they make
good economic sense,” given that there were no
alternatives. Do you agree?
--
Are you referring to the decisions taken to streamline
procedures, straighten rules for collecting taxes, duties,
fees, etc., open up the skies, centralise decision-making?
All of this makes excellent economic and, I guess, political
sense. Efficient governments of any hue will love to bring
in those reforms because they represent eliminating
unnecessary costs. Not taking those decisions retards
progress: look at India. Despite clearing up so much of the
bureaucracy by the present government, a hard core persists
and the government has to find by-ways and alleys to get to
its social targeting, without the support of the bureaucracy
if possible. In the present world of high international
competition, a seamless operating platform is a plus in
favour of a country.
Just
imagine what it would look like if highly regarded places
like Singapore were improving on their already excellent
business climate while we were not even removing so many
inefficiencies that usually breed corruption. Reforms of
this sort raise the country’s international standing and
they bring us FDI and open up new markets. As far as I am
aware, no politician would throw that away. And the public
would not be unhappy, either.
*
But what about the new taxes introduced, overhaul of
existing taxes, etc, as part of the reform package?
--
OK, if you are speaking about some of the taxes that were
brought in, there is a point. This has to be seen in
context. People had built up huge positive expectations
after the last elections. Certain taxes like the National
Residential Property Tax and the fact that the budget
withdrew even the tax exemption threshold on interest earned
from bank savings, proved to be a great disillusionment
against those expectations. The all-inclusive higher exempt
income tax threshold was no remedy or trade-off against the
mis-perception the taxes created.The extensive leveraging
that was done, before the presentation of the first budget,
about a potential increase in the Value Added Tax (actually
there was none) also tensed up feelings. No amount of
explaining the economic choices available or statistics on
the numbers that would actually be impacted by tax, could
overcome the deception that people felt on those
“reforms”. I suppose this made it extremely difficult
for deputies to face the voters.
It
was clear that voters had other more optimistic
considerations in mind before those taxes were introduced.
In the second budget, when the corporate tax rate came
thumping down, it was officially intended perhaps as a
positive signal to business about a light tax regime in
Mauritius. But with the public, it was seen as an
unnecessary handout. Because the axe was falling squarely on
them! I believe this feeling persists among the population
and the high rate of inflation (for whatever reasons) is not
helping. It has something to do with perception of the
fairness of the tax system.
The
question is whether, as in the past elections, business can
use its handouts to political parties to win its bet once
again over prevailing negative popular sentiment. If so, the
tax reforms will be well entrenched and the public
reconciled to how worse could their lot have been had some
“others” secured political power. This is how other
initially unpopular taxes have been introduced in the past
and been finally endorsed. In the UK, we see, however, that
the public is in an altogether different mood chastising the
Labour government on its current weak stewardship of the
economy. It seems the credit they had been giving Mr Brown
for presiding over so many long years of economic stability
and growth has rubbed off easily as soon as his government
embarked on introducing some oppressive measures.
It
is good to try to understand the context in which the
unpopular tax decisions could have been taken. Perhaps,
there was equal apprehension on the side of policy makers
that unless all potential sources of revenue are
tapped, it would be back to square one as regards budget
performance. The budget out-turn actually shows that there
was an under-estimation of budget revenue collections
without introducing those drastic tax changes. VAT has
proved to be a real cash cow, adding significantly to
revenues even remaining at the level at which it was, 15%,
partly because price inflation has been contributing its own
to government coffers. Decisions had to be taken at a point
in time, however, and I can understand that.
*
The latest macroeconomic
indicators show a significant improvement over what obtained
earlier, yet the daily-lived experience of many
people may be telling a different story, and the Prime
Minister himself seems to agree with that. Does this then
make the case for a redefinition of the direction and scope
of the reform agenda?
--
On the economic front, things are going better if you look
at growth rates. How growth is distributed is quite another
matter. This has to do with the inclusiveness of the growth
process.
If
you look at the statistics, employees in the financial
sector happen to be the most highly paid. But only a small
fraction, some 10,000 out of a total workforce of 550,000,
is engaged in that sector. The construction sector is
another sector of high earnings. But how many are there like
these? Not many, unfortunately. These examples show that the
benefits of growth are not widespread and evenly distributed
across the board. Indeed, this may not happen so easily
because similar other sectors claiming identical levels of
skills and paying up good remunerations, may not be easy to
find and groom up in the circumstances in which the economy
finds itself currently.
Now,
some other people were just eking out a decent living in
other sectors before the successive onslaughts of
inflation/depreciation on them. They have become more
marginalised due to the persistence of these factors. Others
had aspirations to work hard and climb up the economic
ladder, which I consider as legitimate. They have been
frustrated by these factors and it is a good sign that the
Prime Minister has such people in mind and is not
overwhelmed by the figures of growth simply.
You
have to bring the maximum numbers in the fold, if not today,
then tomorrow and you should chart a course for achieving it
on many fronts in matters like skill transfer, real
education reform, search for new export product markets with
high value addition, etc. There’s plenty of action that
can be taken to carry on with growth without showing the
more vulnerable persons the exit door.
This
situation clearly means that true economic reform should not
allow the situation to drift in this direction. As I said
before, it is always possible to carry out repairs in
economics. Reform can be re-orientated, recalling that the
economic agenda comes to an end where the social agenda is
not a well thought-out part of it.
*
The “India Shining” proposition was rejected in 2004 by
the Indian electorate, which felt that the reform agenda was
undertaken as if the vast majority of Indians did not
matter. Here in Mauritius, the perceived tax bias in favour
of those who are not so much in need as against those who
have to fork out every possible rupee on tax has created
ripples in many quarters. Is this kind of bias out of touch
with reality?
--
Governments are in the habit of getting dazzled with what
they see on the face of it. They allow themselves to be
carried away by a few examples of high achievement. In the
case of India, the BJP government was out of touch with the
deep rumblings that were going on at the grassroots level
while an urban elite was capturing global IT, ICT, BPO and
KPO markets, cut off from the harsh realities of daily rural
life. For the government, it could hardly have imagined that
India could have captured those heights. Unaware of the
scale of suicides small farmers were becoming regular
victims of due to persistent economic distress, the
government felt confident enough to face the electorate,
confident that it could but win given India’s global
breakthrough. A stalwart of the stature and experience of
Shri Atal Beehari Vajpaye could not sense that the ‘India
Shining’
campaign of the BJP could be offensive to those who were
being left out of the economic equation.
The
Mauritius Times constantly advocated that there was
enough reason to justly collect more government revenues
from the huge windfall gains arising from transformation of
land use, in the IRS projects, for instance, so as not to
have to press too hard by way of taxation on the less
well-off citizens compared to the property developers. I
believe this is a fair argument.
The
government may have its own reasons why it did not choose to
reduce the tax pressure as suggested. Once the public start
making comparisons, however, on the differential effort they
are made to put up compared to property developers, they
will ask why the others are getting off so lightly. As the
prevailing inflation and the current resumption of currency
depreciation start taking a further toll on the purchasing
power of ordinary citizens, questions will be asked on one
of the canons of taxation, notably that a fair tax system
should raise tax on the principle of ability to pay. The
question is: which of the political parties is not
sufficiently beholden to large wealth owners as to make this
issue part of its electoral campaign as the Congress Party
did against the BJP in India and won the elections?
*
MMM leader Paul Bérenger had
expressed his disappointment with the private sector during
the preceding government’s tenure for failing to walk the
talk despite the generous financial and monetary concessions
extended to them by his government. Will Rama Sithanen’s
15% corporate tax succeed where Paul Bérenger’s
concessionsfailed?
--
The private sector is driven primarily by the profit motive.
In the process it creates jobs. It does not create the jobs
first and deal with the profit later. It knows its priority.
This is how it is the world over in market economies like
ours. The private sector does not create jobs for their own
sake as governments would have wished so as to get into the
favours of voters. In its profit maximization drive, the
private sector takes up, in fact fights to get, all
incentives governments are prepared to give it, at times
pleading economic distress or threatening to lay off in no
uncertain terms so as to get to the incentives. In
deep-rooted capitalist systems like the US, this is called
“lobbying” and is by no means considered as bad
practice.
Many
lame ducks pass muster in this game only to find themselves
unable to stand on their own feet once the dope is withdrawn
or when a new level of inefficiency has caught up with them.
Others fatten themselves and neither walk nor talk.
Advantages are here to be taken. Governments cannot expect
such as these to deliver on employment.
Governments
are not always the best judge as to when concessions should
or should not be given and if Mr Sithanen were to realise
subsequently that the private sector did not actually
deliver on the results, he would certainly not be the first
or last policy maker to reckon with this fact. But he looked
to me to be more like a perfectionist who was aligning
individual and corporate taxpayers on a level with each
other and getting past all the incongruities of the existing
differentiated taxation existing before his last budget. In
any event, he has done his part. It is for the beneficiaries
to respond. Time will tell.
*
One paper has equated the Mauritius
Employers’ Federation’s proposal (as contained in its
memorandum to the Minister of Finance in connection with the
2008-09 Budget) for bringing up Income Tax threshold to a
higher level to allow for more disposable income to
Mauritian families with a call for « a new social pact ».
Do we need one such pact in the present circumstances?
--
Inflation tax and other taxes have actually squeezed out
quite a good amount of the disposable incomes of families.
This loss is partly restored by adjusting wages up. This
means employers have to pay up to compensate for the loss
during the annual adjustment exercise. The National Pay
Council works out a formula for this compensation out of the
pockets of employers. This is how the PRB also comes into
play for the public sector employees, out of the pocket of
taxpayers.
If
the compensation is made in the name of a so-called social
pact by raising the income exemption threshold, the
government budget has to forgo revenues to compensate for
the loss of purchasing power in the so-called social pact.
The burden of compensating shifts accordingly from the
employer to the taxpayer. Insofar as it is the taxpayer who
is made to take up this role, there is no guarantee that the
government will not have to identify other sources from
which it will compensate itself for foregoing revenue at
this point. Hopefully, the taxpayer will not be made to step
into the shoes of the employers in the name of the pact.
The
question is not so much whether we need a social pact at
this stage; it is whether foreseeable improvements in the
income exemption threshold for other evident reasons (e.g.
higher cost of living) will be amalgamated with wage
compensations in their own right. As I said earlier, one of
the roles of taxation is to achieve a fair redistribution of
incomes and wealth.
*
How do you, as a former Deputy Governor of the Bank of
Mauritius, view the initiatives of the Central Bank and its
Monetary Policy Committee with respect to the Repo Rate?
Operators in the manufacturing have cried loud lately and
one opposition leader has even alleged ministerial
interference in the workings of the Bank in that regard. Is
that possible ?
--
Look, this is a delicate issue and I hope I will not become
inelegant responding to your question. People have been
asking questions as to what we are headed for. I consider
your question to be fair in that context.
First,
it goes to the credit of the government that it instituted
the Monetary Policy Committee of the Central Bank in 2007,
something that was provided for as from 2004 in the Bank of
Mauritius Act. It took some time but the Committee is here.
It’s a step forward because the previous Central Bank
regime carried the risk that monetary policy decisions could
become a one-man decision with the blessings of a politician
in power, subserviently endorsed by a Board that would not
want to take political risks by refusing to toe the line.
You now have an explicit collective forum for taking
independent decisions that impact directly on the
country’s economic life and choices people make about
money matters. Ministers can speak their mind to MPC members
but the latter know that they should not be swayed except by
facts.
It
is too early to pass a judgement on the MPC’s track
record. It has practically been here for only about a year.
The work of such institutions is judged over longer
stretches of time, 5-10 years. Initially, the MPC started
raising interest rates once it was set up. The rupee which
had been sinking since 2006, started appreciating around
that time, propped up by IRS and other forex inflows. The
prevailing interest rate in Mauritius should have been no
stranger to this situation. The policy bias was then in
favour of local savers.
In
contrast, the last three decisions of the MPC have gone in
the opposite direction, the central
bank’s key interest rate coming down by 125 basis points.
This has had the effect of bringing down local banks’
interest rates, both on deposits and lending. For example,
banks’ interest rate on saving deposits which was at
around 8.5% in July last year has now dropped to below 7% at
the bank holding the largest amount of such deposits.
Starting from 23rd April 2008 when the central
bank last
intervened on the forex market at above banks’ dealt rate
for the dollar, sending an unmistakable signal to the
market, the rupee has depreciated against the US dollar by
7% nullifying the effects of the previous appreciation of
the rupee on consumers for whatever this appreciation is
worth.
So,
in the span of a short period, recently, the saving deposit
interest rate has come down sharply and the rupee exchange
rate is also trending down. Apparently, EPZ needed an
interest rate relief for its borrowings due to the erstwhile
currency appreciation, that has been reversed as from 23rd
April. In fact, EPZ is getting a rupee depreciation as well
as an interest rate ‘relief’. If you look at the figure
of EPZ borrowings from banks, it is only Rs 7.6 billion out
of banks’ total lending to all sectors of Rs 147.2
billion, hardly 5% of the total. The mountain was moved by a
molehill.
The
impact on savers of the fall in interest rates due to this
policy is clear. Interest earned on Rs 100 of savings
deposits is Rs 6.75 per annum, based on the rate published
for the MCB last week. Due to inflation of 8.7%, the
saver’s effective return is minus Rs 1.95 (Rs 6.75
less Rs 8.70). Tax of 15% on the interest earned of Rs 6.75
amounts to Rs 1.01, which further reduces the interest
earned, now at a cumulative negative Rs 2.96. Due to these
factors alone, the saver goes back home poorer with Rs 97.04
at the end of one year from out of his initial amount of Rs
100. This is without reckoning the loss in exchange value of
the deposits due to currency depreciation, supposed to have
been taken in by the inflation rate.
As
you see, the MPC must be aware of consequences like this
when taking interest rate decisions. But it must have given
more weight to other considerations like staving off
unwanted forex inflows, survival of EPZ enterprises and
saving jobs. Currently, it is not easy to pick up forex from
the market and speculation about the extent of depreciation
has set in. Speculation may now be driving the exchange rate
of the rupee.
But
this is not exactly the reason the MPC is here for, isn’t
it? The primary objective of the Bank of Mauritius is to
keep a tab on inflation and you normally tighten interest
rates if international inflation is threatening to visit you
as well, if it is not your guest already! We should have
patience: the MPC will become sharper with time and balance
its views taking all factors into account.
*
Economist Eric Ng argues that the « monetary activism »
of the Central Bank could impede « la relance économique
par la fiscalité » ? Is he right ?
--
In classic economic scenarios, the central
bank does not
toe the line of finance ministers when the latter are
pursuing expansionary policies by granting all sorts of tax
reliefs. Their role is to act as checks and balances in the
system. The European Central Bank (ECB) has been
successively repudiating calls from ministers to relax the
interest rate. The ECB has an inflation objective and it has
therefore constantly refused to answer the call.
If
the central bank in
Mauritius were to add fuel to a possible fire ignited by the
Ministry (note that PRB and other upward wage adjustments
are on the way) by lowering taxes aggressively, the two of
them would be going in the same direction. He is right not
to recommend this double jeopardy which is resorted to when
an economy is heading towards extreme positions like
recession, as it is currently the case in the US.
*
There is also the suggestion to bring down the rate of the
TVA to help the consumer during these diifcult times. Is
this feasible ?
--
I would think twice about this. As I said earlier, the VAT
is the current cash cow for government revenues. Why not
remove other taxes that have been rather badly seen by the
public? A reduction of VAT would be regressive as it would
benefit more the large-income earner compared to the less
well-off who should actually be the targets of policy
action.
Moreover,
the VAT is so politically sensitive that, if there were
subsequently a case for raising it back to where it was, it
would require considerable political manoeuvering.
*
To come back to the present government’s reform programme:
will you say that the reform agenda adopted can set into
motion a virtuous cycle of growth that would also provide
the necessary bedrock for further development (in other
sectors) and ensure a sustained upward curve for the
economy?
--
A reform process is continuous. The givens of today don’t
always hold in a volatile global economy. Things like the
Multifibre Agreement, Lome, etc., go away and you have to
take new policies. You cannot capture all of this with your
present mind. As things stand, you may even be caught
napping by rising oil and food prices without an alternative
recourse. Situations like this keep popping up and you have
to rise to the occasion each time, constantly reforming the
reform program.
A
viable reform program is one like that of Singapore that
keeps the economy branching out in new and highly
remunerated real sectors. We will get to our bedrock when we
reach this point. Economies like ours should become like
predators, ever hunting for profitable grounds to do more
and more business based on inherent skill or financial
strength. We have to get to that sustainable skill base and
financial clout in order to pull markets our way. We are not
there.
*
Economic analysts argue that the Asian Tiger countries took
care of their rural areas (meaning agriculture) first and
that their subsequent high rates of growth owed in no small
measure to prior massive state
investments in human resource development. Have we in
Mauritius got our priorities right?
--
China and India followed different models of growth.
Agriculture was prioritized by China while India placed
initial emphasis on industry. India is still in the process
of bringing more irrigation to farmers. Both of them gave
prime position to technology. Both jumped on the global
bandwagon when the opportunity came. A country like
Singapore did not even have enough land for agriculture; so,
it sharpened the intellect of its citizens as a way of going
forward. You have to identify what your comparative
advantages are and fight on.
The
varied experiences of those successful countries shows that
they had the basic ingredients, no matter which model they
adopted when they had to become technology-based producers
to the whole world. They were so good that they could adapt
to virtually any line of production. Both India and China
are in space technology today. You have to hit the sky to
survive.
In
our case, our classic education system has proved resilient
enough to give us a start on neighbours. That’s good
enough but comparisons don’t add to our plates. We have to
reinvent our training and education if we want to serve the
world in areas other than textiles, the hospitality
industry, financial services and agro-industry. Like them, a
top-bottom approach will fit better with the priorities we
should have although we can keep recuperating those who have
to rise from the bottom. I believe that, for us it is not a
question of getting priorities right, it is on how quickly
we can smoothe the disjointed decision-making structure at
all possible levels, you name it, that raises a new problem
each time you tackle one?
*
What do you anticipate Mauritius will look like in the next
15-20 years after the Tianlis and such other corporations
and the IRS villas and their army of maids and gardeners
would have dug their feet in Mauritian soil? How would you
then feel: a stranger in your own country?
--
Mauritius is completely different in nearly all material
aspects today from what I knew it to be in my childhood.
Extrapolating, I see it changing ever the more in the next
15-20 years and I am not perturbed. This is how things take
their course.
There
could be an army of maids and gardeners serving luxurious
villas but they may probably be imported labour. If we make
and adopt the right policy choices, we could become the
metropolis of a expansive business hinterland. Then, it will
not matter who your neighbour is. If we make the wrong
policy choices, we may with some chance be in the future
what Haiti is like today.
I
am an optimist and I like to think that some day or other,
we will hold at least one key global card in our hand for
which we will become more or less indispensable. We have no
choice than to open up and go for the right adventure.
“A
viable reform program is one like that of Singapore that
keeps the economy branching out in new and highly
remunerated real sectors. We will get to our bedrock when we
reach this point. Economies like ours should become like
predators, ever hunting for profitable grounds to do more
and more business based on inherent skill or financial
strength. We have to get to that sustainable skill base and
financial clout in order to pull markets our way. We are not
there…”
“It
goes to the credit of the government that it instituted the
Monetary Policy Committee of the Central Bank in 2007,
something that was provided for as from 2004 in the Bank of
Mauritius Act. It took some time but the Committee is here.
It’s a step forward because the previous Central Bank
regime carried the risk that monetary policy decisions could
become a one-man decision with the blessings of a politician
in power, subserviently endorsed by a Board that would not
want to take political risks by refusing to toe the
line…”
“The
VAT is the current cash cow for government revenues. Why not
remove other taxes that have been rather badly seen by the
public? A reduction of VAT would be regressive as it would
benefit more the large-income earner compared to the less
well-off who should actually be the targets of policy
action. Moreover, the VAT is so politically sensitive that,
if there were subsequently a case for raising it back to
where it was, it would require considerable political
manoeuvering…”
“Speculation
may now be driving the exchange rate of the rupee. But this
is not exactly the reason the MPC is here for, isn’t it?
The primary objective of the Bank of Mauritius is to keep a
tab on inflation and you normally tighten interest rates if
international inflation is threatening to visit you as well,
if it is not your guest already! We should have patience:
the MPC will become sharper with time…”
“The
givens of today don’t always hold in a volatile global
economy. Things like the Multifibre Agreement, Lome, etc.,
go away and you have to take new policies. You cannot
capture all of this with your present mind. As things stand,
you may even be caught napping by rising oil and food prices
without an alternative recourse. Situations like this keep
popping up and you have to rise to the occasion each time,
constantly reforming the reform program…”
“The
main shortcoming of local budget policies so far relates to
insufficient focus on the micro-management of its effects.
Many people feel let down by a continuous loss of purchasing
power due to rising prices which, you will recall, before
the recent rise in prices of essential goods at the global
level, were being fuelled by the rupee’s pronounced
depreciation in 2006. The budget has to ensure that this
process does not continue to sap the morale of the
population…”
“The
private sector does not create jobs for their own sake as
governments would have wished so as to get into the favours
of voters. In its profit maximization drive, the private
sector takes up, in fact fights to get, all incentives
governments are prepared to give it, at times pleading
economic distress or threatening to lay off in no uncertain
terms so as to get to the incentives. In deep-rooted
capitalist systems like the US, this is called
“lobbying” and is by no means considered as bad practice…”
“If
you look at the statistics, employees in the financial
sector happen to be the most highly paid. But only a small
fraction, some 10,000 out of a total workforce of 550,000,
is engaged in that sector. The construction sector is
another sector of high earnings. But how many are there like
these? Not many, unfortunately. These examples show that the
benefits of growth are not widespread and evenly distributed
across the board…”
“As
the prevailing inflation and the current resumption of
currency depreciation start taking a further toll on the
purchasing power of ordinary citizens, questions will be
asked on one of the canons of taxation, notably that a fair
tax system should raise tax on the principle of ability to
pay. The question is: which of the political parties is not
sufficiently beholden to large wealth owners as to make this
issue part of its electoral campaign…”
“The
Mauritius Times constantly advocated that there was enough
reason to justly collect more government revenues from the
huge windfall gains arising from transformation of land use,
in the IRS projects, for instance, so as not to have to
press too hard by way of taxation on the less well-off
citizens compared to the property developers. I believe this
is a fair argument…”
“Governments
are not always the best judge as to when concessions should
or should not be given and if Mr Sithanen were to realise
subsequently that the private sector did not actually
deliver on the results, he would certainly not be the first
or last policy maker to reckon with this fact. But he looked
to me to be more like a perfectionist who was aligning
individual and corporate taxpayers on a level with each
other and getting past all the incongruities of the existing
differentiated taxation…”
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