House Budget Committee declines to set a VAT rate: The House of Representative’s Planning and Budget Committee has passed the buck, voting to send its report on the Ismail government’s proposed VAT bill to the House as a whole without a recommendation on what the VAT rate should be, said committee deputy chair Yasser Omar.

That sets up two scenarios: The House could legislate a baseline VAT rate — or it could empower the Finance Ministry or to do so when the latter hands down the VAT Act’s executive regulations.

The decision followed a contentious debate between committee members and Finance Minister Amr El Garhy yesterday, who continued to push for a 14% VAT rate. MPs opposed to the rate (and keen on self-promotion) said they expect the VAT to be inflationary, arguing the poor can ill-afford another price hike after the recent rise in electricity prices and the pending phase-out of other energy subsidies. El Garhy pointed out that lowering the rate would adversely impact planned expenditure on health, education and other subsidies from which low-income earners will benefit, not to mention shielding them from most of the VAT’s inflationary effects through the exemptions list. Despite winning over some MPs including the committee’s head, Hussein Eissa, other MPs remained unconvinced, resulting in deadlock at the committee level, Al Shorouk reports. Omar had stated on Saturday that the committee would recommend a 12-13% rate.

Emphasis on enforcement: El Garhy, who was accompanied by Deputy Finance Minister Amr El Monayer, promised to tighten supervision to ensure merchants do not abuse the tax, Al Borsa reports.

Medication and vehicles for the disabled have been included on the exemptions list after haggling with El Garhy, said the House Budget Committee’s Omar. The committee had apparently tried to also add textiles in the mix but the Finance Minister shot that down. Cabinet and MPs have long agreed that healthcare services would be VAT-exempt, but medications were not before yesterday.