Mauritius, the flawed economic model
Artists are always subject to different interpretations. At the end of the day, the endorsement of the artist is down to how popular the artist turns out to be. Popularity is all but a marketing concept; if one can project the image of popularity, one will be popular...
This brings us to the tenure of Hon. N.Ramgoolam as Prime Minister since 2005. The performance of the incumbent government cannot be disaggregated from that of the previous majority (Alliance Sociale) for the simple reason that it is driven by the same political party, Labour. Hence the economic philosophy of our Minister of Finance can only be a variant of that of his predecessor. Before assessing the present economic model, it is important to go back to the eve of the 2005 elections to understand the context in which such a model was created...
“Mo pou change ou la vie dans 100 jours” Those now sadly famous words were the backdrop to a fundamental change in our economic model. By the own admission of R.Sithanen, N.Ramgoolam, facing an impending legislative defeat, asked him to come up with populist measures. Obsessed with power, the leader of the Labour party could not care less about the long-term impact of those measures; what mattered at the time was to win, whatever it took. So, free transport, flat direct taxes and universal pensions were pulled out of the hat of the magician and the reds prevailed.
Those measures had a cost whose real value is still to be ascertained. The politically-infused generosity of 2005 meant that extra sources of revenues had to be found to balance the books. A budget is a zero-sum game- what has been given will be somehow removed. Actually, Labour financed their electoral promises by introducing new taxes (NRPT, Tax on Interest) and removing subsidies (HSC/SC). Last but not least, the gambling culture was introduced, the target being the collection of the concealed indirect tax on gambling. One could argue that this was merely a cunning political plan. I beg to differ - the measures of 2005 have changed the Mauritian economic model and if unaltered, will have deep economic and social ramifications.
Gambling is no more a hobby but a style of life. Older generations would queue in front of banks to save their hard earned money. Of late, it has been a completely different story. People still queue but its the location which has changed. Off-course betting shops, Lotto outlets and casinos have literally captured the people. The lure of easy money is too tempting to resist. While old timers have a go at bank owners for borrowing their capital and rewarding them with low interest rates, new generations are more than happy to risk their capital and give it to gambling stakeholders. Coupled with a high VAT rate and very low income taxes, it is no more a case of a widening of the gap between the rich and the poor but actually the painful reality of the poor getting poorer in absolute terms and the rich richer. Because let us not fool ourselves, the proportion of Lotto players who are poor is very high! To hear government officials say that they are highly taxing this weekly lottery and redistributing it to the poor is pathetic, revolting and aberrant; you don't take a rupee from me and give me 50 cents back and expect me to thank you. Madagascar, you are next :(
Present day Mauritius has topped many tables related to the business vacuum. Business activity is paramount to a healthy economy and the recent boom has to do with a low tax policy, a relatively cheap labour force and favourable exchange rates; this is unlikely to perdure, wages are likely to lose some competitiveness, more attractive fiscal paradises will pop up elsewhere and business vultures will eventually emigrate. We should gear our policies on offering innovative quality products instead on constantly relying on being the cheapest. This inevitably demands a better education system and a new mentality and realising the potential of our resources. Also one should not forget that the real measure of progress in an economy is an amalgam of economic and social factors.
My vision of the future is unfortunately that of a segregated frustrated society where the poor will have less and less to lose, with the middle class living barricaded indoors fearing the man who has nothing to lose and the rich financing the elections and enjoying life under the tropics. All this disturb my belief in the future of the country and makes me think that we are sitting on a socioeconomic time bomb. Hopefully I'm wrong and Mauritius will prosper and come together as one.
Let me conclude by quoting a true artist:
"You can fool some people sometimes, but you can't fool the people all the time"
Kugan Parapen
On behalf of Jeunesse Militante
