Minister Pierre Laporte Defends Disaster Budget

Minister Pierre Laporte went on SBC on December 26^th, 2014, the day after Christmas, to defend aggressively without remorse his Budget 2015 – Disaster program for the Seychelles economy.

James Michel Said Dialogue

While James Michel has told his minister to engage in dialogue with the people, Minister Laporte did the opposite, attacking the Seychelles Hospitality Tourism Association (SHTA) led by Mr. Freddy Karkaria, attacking the Seychelles Chamber of Commerce (SCCI), led by Mr. Marco Francis.

Cross Sector Meetings

The two business associations represent 98% of all business interests in Seychelles. They have collectively been in dialogue with the Vice President Mr. Danny Faure in Cross Sector Meetings since July, 2014, to address the serious economic downturn, and back fire of the Tourism and Fisheries sectors in 2014.

At one point, the situation had become so tense and unbelievable, by Mr. Laporte, that the Minister of Tourism, Mr. Alain St. Ange flew down French Tour Operators to allow them to express themselves on the reality of doing business with the Seychelles market from Paris. Paramount was the lack of Direct Flights from the once lucrative Paris market, followed by the high cost of the destination, and crime against visitors.

It would appear Minister Laporte has dismissed these discussions as mere wind blowing by our crucial partners who have been with Seychelles for 35 years of Tourism. Minister Laporte may not have to worry about these partners in 2015, they are leaving us daily. To bring them back to sell Seychelles, after this dastardly budget for 2015, will be harder then Seychelles placing a man on the Moon.

“Spitting” in a Tour Operators eye, Minister Laporte, is a dangerous sport, and when you play that sport, you risk the welfare of the national economy and all our gains as a micro state.

The Seychelles In 2014

Minister Laporte admits openly that 2014 was a bad year for Seychelles and the Seychelles Rupee devalued by 14%, because we spent more than we earned as a country. He credits his ministry for reacting fast to tighten the monetary policy, he placed a moratorium on car importation.

It all sounds nice in December, but the truth is we wrote about a severe downturn in January 2014 and it took Ministry of Finance and the Central Bank Six (6) months to react with a devaluation of the rupee to curb Demand.

What Does 14% Depreciation of Rupee Mean?

In practical terms, the 14% depreciation meant that a person earning Scr. 100,000.00 per month as Minister Laporte, lost purchasing power of Scr. 14,000.00 in 2014.

This means Scr. 14,000.00 disappeared even from his own pocket under his own Budget and strategy, alone.

A person earning Scr. 5,600.00 per month, lost Scr. 784.00 from their purse each month, and they paid another Scr. 840.00 in VAT on all the items they purchased, if they spent all their money each month. After depreciation of the currency under Minister Laporte’s economic strategy for 2014, and his VAT of 15%, a ordinary worker was left with SCR. 3,976.00 in rupees to spend on food, water, electricity, clothing, toilet & sanitary items. Based on the value of the Seychelles Rupee prior to Mr. Laporte coming back to Seychelles from the IMF in Niger, this money was worth Scr. 1,988.00 under the Rene government, when James Michel was the Minister of Finance.

In spite of this stark and alarming reality that shows, the Seychelles Rupee is devaluing each year, our receivables are low, our expenditures are too high, Minister Pierre Laporte tells us to “stay on the Road (course) of sustainability” as if he is Ronald Reagan speaking to America.

2015 Another Difficult Year He Says       

The Minister admits that 2015 will not be easy. In the same breathe he says, “it will not be more difficult”. Does this mean the Minister has projected another 15% depreciation of the Seychelles Rupee for all of Seychelles? Very likely.

In 2015, if we stay the course to sustainability according to Minister Pierre Laporte, from his limited perspective, of office desk nursing, we will see another 15% depreciation of the Seychelles Rupee, expenditures will exceed revenue, and the snow ball of destruction will well be on its way, and we will see the SCR 5,000,000,000.00 note being used to buy bread. Fantastic is it not? Well, it is Pierre Laporte who has told us to stay the course, and we have seen what his course has done to Seychelles in 2013, 2014. What makes you think 2015 will be any different? It will not. But by end of 2015, the obvious will be in place: everyone will see the destruction of the policy advocated by Minister Laporte, we may well be at -30% because as a ball rolls down hill, the farther it goes, the faster it goes, the course, becomes irrelevant as velocity overtakes the mass.

2013 GDP Misrepresented on SBC By Minister of Finance

Minister Laporte says in 2013 we had 5% GDP. This is a false statement. We never had 5% GDP since the country underwent IMF Administration. Why would a Minister misled simple reporters from SBC searching for answers to a complex question? What is the agenda?

Minister says: “2015 Very Good Budget”

If the Budget is so good Minister Laporte, why are hotels empty from  January- April?

The Budget is as good as the Budget of 2014, which Linda Rosalie correctly pointed out, we were promised a pick up from mid year by Minister Laporte and it never happen. It never happen because Minister Laporte never did anything to pick up the revenues. He never amended any policy that would encourage more fish in the nets, or more tourist to come to our shores. If anything, he discouraged Tourists from coming to our shores when he irrevocably pulled SCR. 6 Million in funds from Seychelles Tourism Board funds to shore up other consuming ministries. By the end of the year, STB had hardly any money to market, and Minister Joel Morgan was sending a DVD to Etihad, begging Etihad to play the DVD on its international flights to promote Seychelles.

Revenue Based On Consumption tax Not Inbound Market

Minister Laporte correctly says he is concern that most revenue comes from Consumption Taxes. This is a valid concern. But it highlights the nation’s failure as well. If we have to rely on tax from Seybrew to run the government, we have a problem. It also honestly explains the hike in taxes on other alcohol. It is an attempt to increase revenue for Seybrew. Minister Laporte can do better then that.

“No Business Tax Collected”- The Man Says

The Minister of Finance says he has not collected $1 Million in Business Tax returns. Hard to believe, but we get the point. Business Tax is 25% on profits. If a business makes no profit, it pays no business tax. Simple. Basically, Minister Laporte is telling us that businesses in Seychelles do not make money. He is right 100%. They do not make any money in profit.

·        When they make a little money, they buy a car, pay 250% tax on the vehicle. What profit do you expect?

·        When a rich investor comes to Seychelles, he sets up offshore companies and accounts, your government allows them to operate onshore. IOT is a perfect example. There are thousands.

·        The home owners on Eden Island set up offshore companies, operate onshore, send their money overseas, and yes, they screw the government. What does the government do about it? Nothing. They accept it because they also sell passports to these homeowners. You cannot hold them accountable, because if you do, they will come to me and tell me they did buy a passport, and they will name and shame all of you in the deal.

·        Yacht operators anchor multi million Dollar yachts in Seychelles, what do you collect from that?

·        Bareboat charters operate 1200 licenses in Seychelles, each boa has 6-15 beds. They are like a floating Beau Vallon Bay with 6000 plus beds. What do you collect on these beds? Bare boat-barely anything. Why?

Transfer Pricing

 Minister of Finance complains about Transfer Pricing of large hotels. He moans on and on about this. I have heard this moan now for Five (5) years. Consul of Ministers, if there is a God, ask Minister Pierre Laporte what has he done in Five (5) years on Transfer Pricing? Ask him why the Ministry of Finance has not been able to solve this problem, but it complains about it every year.

We cannot fill the Ministry of Finance with homosexual gangs frolicking about looking for the next boyfriend on the Public’s expense and expect serious results.

Fill it with business people, create a system of greater accountability and you will get results. Ministry of Finance needs to become accountable to the business community, not the other way around, in Seychelles.

Something For Business

Finally, Minister Laporte says there is something for business in this Budget: deferment on VAT for construction.

Who in their right mind will use that in a economy that has a currency falling 15% per year, if we stay on the course of sustainability as the Minister suggest?

Only VIJAY!

Minister says “Where Do I get Money To Run The Country?”

People of Seychelles, when a Minister of Finance, tasked with getting money to run a country ask this non starter question, we are in trouble.

In spite of that, let me help you Minister Laporte:

Top Priority

1.     Create a Budget That encourages growth, this means keep Seychelles competitive, do not ignore the fact that each night sold on a room or boat, must be sold with a sales pitch to an agent, or traveler directly.

a.     Today, this is the pitch: “Come to Seychelles, we are 21 hours by flight, the most expensive place in the World, bring extra money to get less, experience our exceptional environment, no different from 500 other islands, our room tax I the highest in the world and twice that of our rival destinations in the Indian Ocean. Our fuel prices are static and do not reflect world market trends even if oil is down 52% and counting.

2.     Go After The Transfer Pricing Companies. Stop crying about now for 5 years and counting.

3.     Make the Bare boat industry pay their fair share or do not renew licenses.

4.     Cancel all penalties on all taxes due from past years during all of 2015. Good performers should be rewarded with lenient penalty fees in 2016, since business will be so bad in 2015, that you will be lucky to collect anything as you proposed in this gay Budget-2015.

5.     CSR should not be on gross. Stop stealing to make your life easy. Encourage companies that are making a profit to contribute to socially responsible projects in the community by offering 200% tax deduction on the donation. Stop scamming the Business community and the money is wasted on Christmas decorations, fake NGOs formed by PL to use up the money on trips, airline tickets, meal allowances, clothing allowances and so on.

6.     VAT is not sustainable at 15%, nor is the government sustainable at 5% VAT as you suggest. Reduce VAT gradually, correlating it to improved compliance, improve reduction in Price Transferring, Compliance in bare boat industry etc…. The for this rest with Ministry of Finance, not the Business community. The puffs at Finance are not doing their job, now you blame it on the ordinary people of Seychelles and make business, hotel investors and operators suffer.

7.     VAT on rooms must be reduced to allow us to sales pitch the room and the destination or we are dead. Simple. Immediately, reduce room tax to 10%. Once compliance improves, revenue will improve, and you will be able to take it down to 7% in subsequent year 2016, if you do your work.

8.     VAT on goods needs to be reduced to 10% to allow the people to breathe. Seychellois are suffering, and many of our people lack the skills to move forward in employment. Night Schools need to be started using existing infrastructure. The eye to liberating economically our people rest in Education, not Indoctrination.

9.      Give STB the money they need to push the destination. 81Million is not enough since you took Scr. 6 Million last year , and depreciation took SCR 10 Million. As your national financial program fails, you fail everyone, even those on the front line who are trying hard to sell a bad product.

10.                                                                                                                                    Throwing money at a bad product is a little like injecting heroin into your veins. It may take some time, but eventually, you run out of money, your reputation is in ruins, your  body becomes dysfunctional. This is what you are doing to Seychelles when you make it the most expensive place on earth, and propose a marketing budget for it. You ruin the reputation of all those who promote her, sell her, and service her guests day to day.

Once you have done the above, you will have all the money you want to do whatever you want. Pay your debts, build a bridge financed by GOS not VIJAY.

If you ignore these priorities, you may as well hand VIJAY the keys to State House and the country can be run by Engineers……at least the puffs  will be out at Finance and the People of Seychelles will have a fighting chance out of the realm of lunacy.

May God Bless All Freedom Loving Seychellois!