Egypt ‘sales tax hikes on hold for two weeks’
Cairo, December 26, 2012
Egypt's government will not implement a series of planned tax increases until it completes a dialogue with different parts of society, Al-Mal newspaper has quoted Planning Minister Ashraf al-Araby as reaffirming.
The government on Tuesday began a series of meetings with businessmen, trade unions, non-governmental organisations and other groups to persuade them of the need for austerity measures to resolve the country's financial crisis.
Earlier this month it announced increases in the sales tax on a range of goods and services, only for President Mohamed Mursi to suspend them within hours as the country prepared for a referendum on a contentious new constitution.
The unpopular measures are deemed necessary to secure $4.8 billion Egypt is seeking from the International Monetary Fund. The government has asked the IMF to delay by a month a meeting it had scheduled to approve the loan to allow it to seek more support for the moves.
But the administration is under increasing pressure to take steps to shore up the country's finances, with some citizens worried enough to withdraw their savings from banks and exchange them into hard currencies while its international credit rating has also been cut.
"The government will not implement the increases earlier than in two weeks, after the end of the social dialogue that the government is currently holding," al-Mal quoted al-Araby as saying.
On Tuesday, the ministers of finance and investment met the members of chambers of commerce and industry and the investors' union in the first round of its social dialogue, al-Mal said.
Al-Araby said Egypt needed $14.5 billion to plug an external finance gap through the end of June 2014. In addition to the IMF, the government has been negotiating for loans from the World Bank, the African Development Bank and other international organisations.
He said the economy was passing through a crisis that it would overcome as soon as the country's political polarisation came to an end.
The austerity measures include increases on the sales tax on goods and services that range from alcoholic beverages, cigarettes and mobile phone calls to automobile licences and quarrying permits.
Al-Ahram newspaper quoted Finance Minister Mumtaz al-Saeed on Tuesday as saying the higher sales taxes would be applied on 21 types of goods and services. – Reuters
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