Increase Taxes in Egypt after the Revolution
Since Increasing Taxes in Egypt after the Revolution of 2011, the Egyptian government has been faced a huge economic challenge such as low foreign investment, increased public debt, high unemployment rates especially between youth and women. As a result of the political situation after the Revolution, the Government tends to think about loan agreements between Gulf countries like Saudi Arabia, the United Arab Emirates, and Kuwait. To finance the budget shortfalls and supply liquidity to the central bank of Egypt. the Saudi Arabia Government transferred to the Egyptian government about $25 billion between 2013 till 2016.
On the other hand, the Egyptian government started some negotiations with the International Monetary Fund to get $ 12 billion in loan agreements on November 11, 2018. In addition to the government plans to increase the tax rates by 131 % at the end of the fiscal year as a part of series of measures for the economic reform program, these additional taxes would be on the basic services. For example, water, electricity fees, real state, fuel, gasoline, transportation, banking transaction, loans, and communication services. Finance minister , Amr Al -Garhy declare that there is increasing of tax which will create a positive impact to recognition the revenue statements to the financial years of 2019- 2021. He said the state has a certain plan to reach a revenue off 1,4 trillion pounds from the taxes by 2021.
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Additionally, He said the ministry will not spending money any more to support some services. like water, Fuel and electricity, in addition he said there is more tax applied on specific product. For example: cigarettes .There is a new annual tax applied on real state, and other changes on the country’s smart card system to prevent the corruption in distribution center of foods to ensure the financial Eid will reaching to the low-income families, create new jobs for them. The government in Egypt applied the increasing on the tax by 131% to deficit on the pubic budget, Egypt made an agreement with the international bank to get a $ 12 billion loan and established some complexities to prevent cash dollar transfers abroad to keep the money in the country.
Lastly, Egypt applied the value-add tax for all stages of the products and services. These decisions and hard measures are going to affect negative on the low-income Families who are the unable to afford their basic requirements since the cost hikes, on the prices of products and goods that increased twice once the government applied the general sales tax on these products and the retail sellers changed the prices with new tax. It will be hard for the people to buy these products especially if related with medical products or medicines. These effects will recache their income as a result of the increase on the annual income tax which increased to thirty-three percentage, the highest rate since 1986. In the other hand there is not increase in the salaries, which forces a lot of Egyptians to work two or three job to could provide their basics need for their families.
Also, the income tax has a big effect on individual’s life. For example, they must submit a declaration about that they own as offshore houses to the authorities to identify their annual tax rate. Most Egyptian in aboard stopped making transactions with formal banks as a result of the higher rate exchange, which rose to twenty- two percent, this rate would negatively effect on direct investments and make some obstacles for investor’s foreign currency to bring to Egypt.
For example, some companies started to deduct from the direct benefits like salaries and indirect benefits like the decrease in the rate of the health insurance for their employees as a new strategy plan. The transportation services were also affected as result of the higher increase in fuel and gasoline prices which make the low families straggle to manage their life with the cost of living due to the tax. In conclusion, the huge increase in taxes would make lives hard for millions of low-income families, they could not pay for water, electricity, cell phone, bills and them transportation