Egypt’s parliament – the House of Representatives – approved on Monday a draft law aiming to impose “a financial development fee” on a number of items including gasoline and diesel fuel, athlete contracts, the licensing of sporting services, and pet animal food.
The draft, an amendment to law 147/1984 on the imposition of a state financial resources development fee, will levy a fee of EGP 0.30 piastres (a third of one Egyptian pound) per litre of gasoline and EGP 0.25 piastres (a quarter of one Egyptian pound) per litre of diesel.
The abovementioned fee was rejected by the House's budget and planning committee on Sunday, but Minister of Finance Mohamed Maait insisted during the discussion in a plenary session on Monday that the new fee (item 23) remains part of the law.
Parliament speaker Ali Abdel-Aal said the government is in desperate need for financial liquidity in order to be able to absorb the shock caused by the coronavirus crisis.
"I think that we should not use this fee to score political gains because this will be at the expense of the general interest," said Abdel-Aal.
The law will also levy a fee on sales of mobile phones and accessories (5 percent), commercial internet bills (2.5 percent), and parties and entertainment services in hotels and public tourist centres (12 percent). The services, parties and concerts offered by the Ministry of Culture to spread cultural awareness will be exempted.
The law states that a fee ranging from 1 to 7.5 percent will be also imposed on contracts related to the buying, selling, lending or renewing the contracts of Egyptian and foreign athletes and coaches.
Raw tobacco will be subject to a fee of EGP1.5/kg, while manufactured tobacco products and shisha tobacco will be subject to an EGP 3/kg fee.
Imported finished steel products sold on the local market will be subject to a 10 percent fee after customs and taxes. Food used by pet animals (dogs, cats and decorative birds) will be subject to a fee equivalent to 25 percent. An EGP 5 fee will be also imposed on all transactions subject to the stamp tax, with the exception of butane cylinders and individual tickets for land and railway transport.
An EGP 5 fee will be also levied on certificates issued by public notary offices, and a 1 percent fee on each item to be bought from free shops and exceeding in price more than $5. Members of foreign diplomatic corps and consular offices will be exempted.
Finance Minister Mohamed Maait told parliament’s budget and planning committee on Sunday morning that the draft law comes out of necessity and aims to contain the disastrous impact of the international economic crisis caused by the spread of the coronavirus.
“Please know that a finance minister is not a magician and he does not have a magic wand to procure financial resources,” said Maait, adding that “we as a government have a lot of duties such as offering subsidised goods and spending on services, and in this respect we seek to generate new financial resources as long as these will not be a new burden for ordinary citizens.”
Maait argued that additional financial resources are also important to cut the budget deficit, contain debts and avoid any rise in prices or inflation rates.
Some MPs like Talaat Khalil, the committee’s deputy chairman, criticised the legislative amendment, arguing that “it shows that the government lacks political sense because the amendment comes at a time when all citizens are suffering from the bad impact of the coronavirus.”
Khalil said imposing fees on diesel will be particularly biting because it will raise transport prices for poor citizens.
Mohamed Selim, the committee's deputy chairman, warned that imposing a fee on gasoline and diesel fuel will negatively affect poor citizens. "It will push prices of goods high and this is harmful for millions of citizens," said Selim.
In response, Maait said the government has been studying the amendment since 2018 and so it is trying its best to contain the negative impact of the current international economic crisis. Maait revealed that “the new fees on gasoline and diesel products alone will generate EGP 6 billion in state revenues, and EGP 15 billion in total."
Maait vowed that the new fees will not lead to any rise in prices.
“This new measure is important to secure the country’s economic future, and make sure that we have adequate financial resources to meet our obligations such as paying the salaries of state employees,” said Maait.
Maait said that “nobody knows for sure when the world will get out of the coronavirus crisis and there is no doubt that the country’s sovereign revenues will be adversely affected by this pandemic, and so we are trying to take preventive measures that aim to boost the state revenues and soften the blow of the crisis on poor and limited-income citizens.”