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Egypt Shura Council halts tax law citing inadequate data

Lawmakers complained that the government had not provided figures about the impact of a new income tax law

Reuters, Ahram Online, Monday 29 Apr 2013
Shura Council
File photo: Members of the constitutional assembly attend a session at the Shura Council building in Cairo, Egypt (Photo: AP)
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Egypt's parliament halted its reading of a new income tax law on Monday, saying the government had not shown who would be affected by the measures and how much it would generate in revenues.

Lawmakers criticised the government's competence in drafting the legislation, which is needed to secure a $4.8 billion loan from the International Monetary Fund.

Speaker of the Shura Council Ahmed Fahmy appeared visibly frustrated as he announced that the chamber would halt what had been scheduled as its final reading of the law because it did not have the necessary government data.

"What finance ministry or tax authority does not know how to calculate the income bracket or who benefits and who is harmed? This is not worthy of the council," Fahmy said, as members clapped in support.

Fahmy said that debate was suspended "until the government provides correct data, otherwise this government can go wherever it wants to go."

Other members of the council – which currently holds legislative powers - also criticised the government for not being able to provide estimations of the impact of the new tax regime on state revenues. "They haven’t provided a single figure that the treasury will gain [from the new law]," complained deputy head of the Freedom and Justice Party Essam El-Erian.

In addition to cutting fuel subsidies and raising sales taxes, Egypt has said it will rein in its soaring budget deficit with measures including tax changes targeting the wealthy.

Two weeks of talks in Cairo between Egyptian officials and an IMF team earlier this month failed to produce an agreement.

Diplomats told Reuters at the time that President Mohamed Morsi had yet to endorse required tax increases and subsidy cuts that prompted him to halt implementation of an earlier IMF deal in December.

Cairo has said it hopes to get an IMF deal by next month.

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