That’s the official so-called "witty" narrative that tries to give the impression that Govt’s focus on social justice trumps fiscal responsibility. But the reality is closer to that of our lotto games- the Authorities collect tax mainly from poor households which goes to government coffers and is redistributed through its schemes which never reach the poor.
Indeed, if we choose to abstract from the outsized fiscal gaps, the elevated public sector debt ratio and the reliance on easy money to finance these fiscal profligacies that are affecting the external sector, especially in the context of ongoing high current account deficit, even Pada’s twisted simple logic leave many direct questions unanswered.
Who bears (a) most of the burden of the taxes and (b) on what is the money being spent ?
(a) The tax burden: Our present tax regime has not been able to achieve the main canons of a good tax system – fairness (based on ability to pay) and equitable whereas the previous tax regime showed elements of progressivity, taking a greater share from high-income earners and a smaller share from low-income earners – Income distribution was more equal .
The share of indirect taxes in the total tax revenue of the country is 65% against 35% for direct taxes (taxes on personal and corporate income) making our tax system both unfair and regressive . Moreover, fuel taxes are really just like another VAT that adversely affects the middle class and the poor. It increases the regressivity of our already unfair tax system impacting far more heavily on both the middle class and the poor. (The poor spend a larger portion of their income on driving than the rich do).
It also has a trickle-down effect on inflation, higher fuel prices mean higher freight, and higher freight makes transportable goods more expensive thus driving up the prices of goods and services throughout the economy. While inflation has been a boon for Govt boosting its tax receipts , it has been a challenge for lower and middle-class families, experiencing increasing debt interest costs and seeing their spending power melt away.
(b) Taxpayers feel that they have been conned ; the billions collected, instead of being passed on to consumers in terms of sustainable, inclusive and broad-based growth that would have made a difference in the welfare of the common citizen, went to finance populist measures and prestige projects like the Metro , the Cote d’or stadium, Safe City or wasted on such blunders/scams like Betamax, Pack & Blister and the STC contracts to “quincailleries”, on Molnupiravir , Air Mts and SBM under the supervision of the super accountant-cum-expert, Mr Sattar Hajee Abdoula.
Some other examples of how they were using taxpayers’ money are : the Mayhem at Dubai, Liverpoolgate , MICgate, Sniffinggate and its aftermath , Regulatory capture to the the benefit of the gambling mafia, state capture by cronies, (security, gardiennage, drains...)
Taxpayers’ money should have been spent to accelerate development, not arrest it. The greater priority was (among others)
1. to develop a new economic model on the strong pillars of a caring economy, on the proper use of land for food sovereignty, on ecological restoration, an integrated concept of housing, leisure and backyard gardening, on organic agriculture, proper water management and the necessity of collectivizing lands , “le développement économique à travers la production utile” (not supportive of expensive infrastructure projects that do not produce major economic returns.)…and among others, on the regional initiative of an Indian Ocean Solidarity and Cooperation Community, which will inevitably help our geographically proximate sub-regions of countries to more effectively deploy their factor endowments.
2. to undertake structural and sectoral reforms to generate productivity improvements and improve export competitiveness and extend our production frontier, that is, boost future production of goods and services , both quality and quality-wise.
3. to develop new pillars of growth
4. to ensure that the education sector receives its due share and undergoes a total overhaul -a sector where the elite captures all the redistribution
5. implement a major capital investment programme to bring the health services to modern affordable standards.
6. to prepare ourselves in the longer term for a new tourism that is emerging, sustainable, environmentally and socially responsible, and characterised by flexibility and choice.
7. to undertake a fiscal reform programme that will curb wasteful spending and rein in recurrent expenditures while ensuring an increase in capital expenditures in priority sectors, re-introducing Programme-Based Budgeting (PBB) , a budget management process with an effective monitoring and evaluation process, that will confer greater accountability, transparency to fiscal management while enhancing fiscal discipline and bringing efficiency .
8. to reform/close down the amorphous SOEs that seem irrelevant to most citizens and have been profligate with taxpayers’ money .
9. to protect the poor and vulnerable from a drastic erosion in purchasing power, rather than stubbornly engage in unaffordable social spending.
As to the reform of the tax system to ensure fairness and equity and improve its buoyancy , Prakash Neerohoo has detailed out the main measures in a brilliant paper titled “Taxes Sur les Carburants: Les causes et effets, un problème d’équité fiscale.”
Plus de 80 % de l’argent récolté à travers le Consolidated Fund sont redistribués à la population- a widely shared prosperity that is supposed to be about changing the country for the better not for the worse.
