Egypt working on new revenue strategy to plug budget deficit
EXCLUSIVE- New revenue strategy to curb budget deficit could be on the way: The government is discussing a new revenue strategy with the goal of cutting the budget deficit to 5% over the next 3-4 years, a senior government official told Enterprise. The government expects tax revenues to surpass EGP 1 tn over the coming years under the new strategy, which relies on several pillars:
Improving the tax collection process: The in-the-works strategy could include measures improve the tax collection process with the aim of raising tax receipts to 18-20% of GDP, up from a current 14.6%, the source said. Amending tax legislation to fix loopholes and have it match international standards to attract investors would be on the agenda.
Convincing the informal economy to go legit will also be part of the government’s new revenue strategy, the source said. Incentives, including VAT discounts access to subsidized finance and insurance could be on offer to those who register their businesses and pay taxes. The government does not have an accurate figure of the size of the informal economy, but the source said unofficial data indicates it is at least as large as the official economy.
What about non-tax revenues? Increasing the prices of a number of services and commodities — that have stagnated for far too long — would also be on the agenda, the source said. The state’s privatization program would also fall under this category, as would efforts to amend the Mineral Resources Act to make the best use of the country’s natural resources. Increasing development fees and the state’s allocation in private funds would also be part of the strategy, which would also include efforts by the government to re-prioritize its spending plans to curb expenses and balance the budget.