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Egypt constitution panel rejects article on progressive taxation

Constitution-amending body rejects leftist politician's proposal for article stipulating progressive taxation in amended draft

Ahram Online, Monday 11 Nov 2013
Leftist political figure and a former leading member of the Egyptian Social Democratic Party Mohamed Ghoneim (Photo: Ahram)
Views: 5061
Views: 5061

The committee amending Egypt's constitution has rejected a proposal to enshrine progressive taxation as a guideline for the country's tax policies.

After a three-hour session on Sunday, the 50-member committee dismissed Mohamed Ghoneim's proposal to add an explicit article regulating taxes on incomes and profits.

Renowned physician Ghoneim is a prominent leftist political figure and a former leading member of the Egyptian Social Democratic Party.

Ghoneim's proposal cited progressive taxation as "one of the tools for achieving social justice that should be regulated by law."

Sources from inside the committee told Al-Ahram's Arabic news website that members opposed to Ghoneim's suggestion were concerned it would bring "disaster" to the country's already reeling economy and lead to a fall in foreign investment.

Progressive taxation has been raised many times since the January 2011 uprising, with social campaigners calling for high-earners to contribute more to the state.

Some experts and business owners, however, prefer to increase state revenues via a Value Added Tax (VAT), corporate taxes and the to-be-implemented property tax, rather than shaking up income tax to avoid spooking investors.

However, proponents of progressive taxes argue that big business in Egypt pays low taxes compared to counterparts elsewhere in the world, thus depriving the state of much needed revenue to spend on social services and infrastructure projects.

The current Egyptian personal income tax structure stands at: first segment (LE12,000 – LE30,000) 10 percent; second segment (LE30,000 – LE45,000) 15 percent; third segment (LE45,000 – LE250,000) 20 percent; fourth segment (LE250,000 and up) 25 percent.

The 2012 constitution was suspended pending amendments as part of the roadmap announced on 3 July, following the ouster of former president Mohamed Morsi after mass nationwide protests.

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Prof KM Abadir, Imperial College London
11-11-2013 02:54pm
Social justice is better achieved without progressive taxes
Progressive taxes REDUCE the amount of money collected by the government. This has been proved, both by economic theory AND practice: Social justice is to charge rich people a higher % of their income, which can be achieved with a flat tax rate together with rebates/exemptions at the lower income end. This maximizes tax revenues, unlike progressive taxes that increase the rate on every EXTRA pound made & therefore discourages extra effort & production. Progressive is bad for the economy, in addition to being bad for government tax collections.
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