Egypt told the International Monetary Fund (IMF) that it plans to amend the state budget for the new financial year, said David Hawley, spokesperson for the IMF, two days ago.
Hawley added that the IMF is examining the impact of the potential amendments on a request for an IMF loan submitted by Egypt, and an IMF delegation will visit Cairo for talks. “The Egyptian government will tell us if it no longer wants a loan from the IMF.”
The Egyptian government approved the new state budget for FY 2011/2012 on 1 June, and it raises public expenditure by 25%.
Meanwhile, Reda Eissa, an economic researcher, severely criticized the government and the Finance Ministry, saying they will not be able to achieve social justice with the new budget. He said the ministry has still not announced its proposed amendments so they can be discussed, and accused the government of following in the footsteps of the one toppled by the 25 January revolution.
Eissa told Al-Masry Al-Youm that former finance minister Youssef-Boutros Ghali had promised to abolish tax exemptions for free zones and to reduce taxes on revenues, and this has not happened. The taxes were reduced but the free zones remain exempted from tax.
He added that both Ghali’s plan and the new state budget fail to create a just system of tax since companies are required to pay 13 percent in income tax while ordinary citizens are required to pay 28 percent.
Ordinary citizens' contributions account for 56 percent of total tax proceeds while companies only account for 16 of the total, he added.
Translated from the Arabic Edition
