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Sunday, 29 July 2018

Parliament just won’t let the idea of a wealth tax die

LEGISLATION WATCH- Parliament just won’t let the idea of a wealth tax die: It is looking increasingly likely that the House of Representatives will push legislation that will see some form wealth tax imposed. A new amended to the Income Tax Act is currently being drafted that would see those making over EGP 1 mn per annum pay an income tax of 30%, up from a current 22.5%, House Legislative Committee member Rep. Mostafa Bakri tells Youm7. His justification for the law is one we’ve heard time and time again, which is that a wealth tax would shift the tax burden to the rich from the poor. His statements imply that this current draft runs with a proposal presented by Rep. Mervat Alexan last month, which see salaries of more than EGP 500k per year taxed at a 25% rate. Bakri added that the legislation would be introduced in the fall session of the House and that businessmen and business associations will be consulted on the amendments when it goes through “a national dialogue.”

You can partially blame those blue-blooded reds for the proposal’s popularity: Bakri noted that the encouragement from in House to push through the legislation comes from “the support such a measure has in the business community.” He specifically referenced an oped by the head of the Union of Investors Associations Mohamed Farid Khamis in support of Alexan’s proposed wealth tax. Bakri insisted that the move would also not impact investments.

We said it once, we’ll say it again — stop talking about net salary: These representatives are looking at the wrong factors here to justify such a move (either intentionally or unintentionally). Just about every single employee in Egypt is quoted a net salary, meaning a salary after businesses remit wage taxes, social insurance, et cetera. No salaried employee in Egypt remits a tax return of his or her own unless they have outside income, so the working poor would never feel the impact of such a tax.

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