Egypt approves tax on wholesalers and retailers

Published May 23rd, 2001 - 02:00 GMT

The Egyptian parliament has given its approval for new taxes to be imposed on wholesalers and retailers under the final phases of a sales tax law despite opposition criticism, parliamentary sources said on Tuesday, May 22. 

 

"The People's Assembly approved a government request to implement the last two stages of the tax law during a late night session which was boycotted by about 54 legislators", they said. 

 

Only industrial producers, service providers and importers had been paying the tax in the first stage of the General Sales Tax Law that started to come into force in 1991. 

 

Under the newly passed stages of the law, which come into effect as soon as they are signed by President Hosni Mubarak, wholesalers and retailers whose annual turnover is at least 150,000 pounds ($39,000) will be liable to pay the tax. 

 

The government argues that the increased tax burden is unlikely to lead to higher prices in the present environment. "Due to a relative economic slowdown, higher inventories...and stronger competition, wholesalers and retailers will not currently be able to move this burden to the end consumer," the report said. 

 

Opponents say the last two stages of the tax law, with tax rates ranging from five to 10 percent, should not be introduced while the economy is suffering from recession. 

 

Economists in a Reuters poll in September forecast that GDP growth in the fiscal year to end-June 2001 will have slowed to about 4.3 percent from around 4.5 percent the previous fiscal year, short of government estimates of 5.5 percent both years. 

 

Officials say that the new stages of the tax will be imposed on only 16 percent of goods, while the first stage affected about 40 percent of goods and services. 

 

"The second and third stages will not cover basic food stuffs," Finance Minister Medhat Hassanein was quoted in the state-owned Al-Ahram newspaper on Tuesday as telling parliament. 

 

The government has staggered the implementation of the law so as to give both traders and the tax authority enough time to adapt. ― (Reuters, Cairo)  

 

© Reuters 2001

© 2001 Mena Report (www.menareport.com)

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