Egypt's parliament postpones discussion of amendments imposing sweeping tax hikes

Gamal Essam El-Din , Tuesday 14 Dec 2021

Egypt's parliament – the House of Representatives – decided to postpone the discussion of three laws imposing sweeping tax hikes on a number of goods and services. A large number of MPs warned that the new hikes will exert financial pressure on citizens because they come at time the coronavirus is hitting their everyday life hard.

File photo: Egypt s House of Representatives

Atef Nasser, the spokesman for the parliamentary majority of Mostaqbal Watan Party, proposed that preliminary approval of the hikes be postponed and that the amendments receive serious study first before they are put up for discussion before the House again.

As a result, Parliament Speaker Hanafi Gibali decided not to put the amendments up for a preliminary vote on Tuesday. Gibali said the House's new plenary sessions will be held on 26 December.

The postponement decision came after many MPs, including those of the majority, attacked the amendments, agreeing that they could do harm than good to poor and average-income citizens.

Badr said the new tax and fee hikes are surprising and shocking because minister of finance said 10 days ago that the government does not intend to impose any new taxes in the coming period. "Does this mean that the minister is lying," said Badr.

Ayman Abul-Ela, another majority MP, said "the amendments are like honey in poison and would cause a lot of harm to the average-income class in particular."

Ahmed Farghaly, a majority MP, accused the government of pick-pocketing citizens.

The postponed amendments entailed three laws regulating the stamp tax (111/1980), the entertainment tax (74/1999), and the development fee (147/1984).

A report by the House's Budget Committee indicated that a development fee for exiting the country at airports will be increased by LE50 from LE50 to LE100, with the exception of foreigners visiting the tourist governorates of the Red Sea, South Sinai, Luxor, Aswan, and Marsa Matruh. Bus or truck drivers regularly transporting passengers and goods across Egypt's borders will be exempted from the fee.

The report also indicated that a fee will be imposed on all items purchased from duty free shops, equivalent to 3 percent of the item's value with $1.5 minimum.

The report said a 3 percent fee ($1.5 minimum) will be also imposed on every single bottle of an alcoholic drink purchased from duty free shops. Every additional bottle for personal use will be charged a higher 10 percent fee ($12 minimum).

Members of the foreign diplomatic and consular workers are exempted from this fee.

Besides, the report indicated that all kinds of finished durable goods will be subject to a 2 per cent development fee. Minister of Finance Mohamed Maait is expected to issue a decree showing a list of these goods. "Locally produced and imported soft drinks will be also subject to a development fee equivalent to 5 per cent of their values, with a LE0.25 minimum (25 piasters).

Other legislative amendments aim to impose an entertainment tax (74/1999) on entry at casinos, theatres (including the Opera House) and cinemas, and sporting clubs.

The new amendments also show that a stamp tax on most insurance premiums would be raised by 1 per cent.

Minister of Finance Mohamed Maait defended the proposed tax and fee hikes, insisting that most of the goods and services covered by these hikes are "luxury items like discotheques and ice skating and these are not used by the average income class." "Besides the hikes will be imposed on luxurious food like caviar and shrimp and I wonder "do the average class ear caviar and shrimp?"

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