This week both the Principal Secretary of Finance, Mr. Mohamed Afif, and Mr. Guy Adam of Seypec, went on SBC TV on Sunday 12th August, 2007, to warn us that the government is considering increasing the price of fuel to make up for the loss of seventy-seven million rupees (R.77,000,000) last year. This has caused alarm amongst the general populace who are already burdened by heavy taxes and high prices. In his election manifesto on which the electorate elected President Michel, the people of Seychelles were never warned that the present government intended to increase the price of fuel. In fact, President Michel repeatedly prided himself on the fact that the government had decided to absorb the increase in the price of fuel to spare the people an additional financial burden. Surprisingly, what Afif and Adam did not talk about though was the last fuel price hike which the government introduced during the gulf war and which we were told will go back to normal after the war. This turn out to be yet another lie told by the SPPF government to pacify the people. After the war ended, over 16 years ago, we continued to be burdened by the increase in fuel prices which by now should have more than compensated for the shortfall last year.
On top of that, the SPPF government also introduced an additional tax burden on everybody when Mukesh Valabhji (Financial Advisor to former President Rene) together with President Michel (Finance Minister at the time) introduced the Goods and Services Tax (GST). Mukesh, flanked by both former president Rene and the former minister of finance Michel, presented MERP along with the GST, live on SBC Radio from the Plantation Club and on national television; a tax which we continue to pay even today. During the past 5 years the Seychellois nation has paid more taxes than at any time before, and it looks as if the present SPPF government under the leadership of President James Michel will be one characterized by high taxes, inflation and constant price increases. Instead of looking at the total liberalization of the economy to trigger economic growth and create wealth, the government has systematically resorted to taxing the people more and more to make up for the shortfall in government revenue. Paradoxically, President Michel went on national television only last week to boast about the miraculous increase in Central Bank Reserve which he says now stands at $110, 000, 000 and 5.3% overall growth figures. He stated that the rate of growth is expected to reach an all time high of 7% next year. Yet, inexplicably, the Principal Secretary has been sent on TV barely a week later to lament about the reduction in government revenues to the tune of R.77, 000,000 last year alone, sending mixed signals to the business community and spreading confusion. This is certainly not good for the economy as it creates doubt and suspicions in the minds of prospective investors.
Whilst the President has painted a rosy picture of our economic situation, by contrast both Afif and Adam have painted a picture of doom and gloom. Consequently, we do not know who to believe any more and the “feel good factor” created by the President of the Republic hardly a week ago is quickly evaporating into thin air. The President has already set an ambitious target to double GDP by 2017; a feat which is looking more and more unrealistic by each passing day.
The Seychellois people are already paying taxes through their noses and can ill afford to bear yet another price increase on fuel with no concomitant increase in salary. How on earth will a normal family cope after 15% of their household income is already being taken by the government through payment of GST, if an additional price increase on fuel is introduced? It is now a known fact that about 9% of household in Seychelles lives in dire poverty and 12% in poverty. What would be the impact of yet another price increase on such an essential commodity as fuel on those households? The government should consider increasing its revenue by introducing economic policies which would generate higher revenue and increase wealth rather than resort to more taxes and price increases to solve its economic problem. An increase in the price of fuel will also have a domino effect, causing the cost of all goods and services to sky-rocket yet further. Seychelles is already known as one of the most expensive countries in the world and the government can ill-afford to make matters worse. The last thing we now need is yet another price increase. A price increase should remain a measure of last resort and should not be employed easily as a quick fix solution to our endemic economic difficulties.