Before Egypt’s parliament adjourns for summer recess in the first week of September, it aims to tackle a number of key economic issues, at the top of which is a new valued-added tax bill that represents an integral part of a landmark agreement which Egypt and the IMf signed on 11 August.
According to parliament’s debate schedule, the draft value-added tax (VAT) law will be discussed on Sunday.
A 118-page report prepared by the two committees of legislative and constitutional affairs and the budget indicated that as the draft law is highly controversial, with MPs not able to reach an agreement on some of its articles, especially the one which sets the VAT at 14 percent.
The VAT is planned to avoid tax evasion as it will be applied to each member of the production chain of goods and services to the final retail stage, instead of the current sales tax that is imposed as a one-off on the final sale to the customers.
The VAT that the consumer pays when the product comes on the market applies to the cost of the product, minus the cost of the components that have already been taxed.
“While MPs from different ideological backgrounds approved the draft law in principle, they disagreed on whether the VAT should be set at 14 percent,” the report said, adding that “this critical issue will be left to be decided by MPs during the plenary session debates.”
The two major political forces in parliament – the pro-government Support Egypt bloc and the liberal Free Egyptians Party – announced today that they will urge their 400 affiliated MPs to vote in favour of the law. They did say, however, that whether the VAT should be set at 14 percent will be left to the plenary debate tomorrow.
Alaa Abdel-Moneim, the parliamentary spokesman of the “Support Egypt” bloc, told reporters Saturday that “while the government wants the VAT to be placed at 14 percent to help close the budget deficit, a large number of MPs want the VAT to stand between 10 percent and 12 percent only in order not to trigger a public backlash.”
“The issue will be decided during the plenary debates to see which rate will get the majority of votes.”
In a press conference on Saturday, the Free Egyptians Party, founded by business tycoon Naguib Sawiris, also agreed that the VAT rate will be left up to MPs during the final debates on Sunday.
Businessman Farag Amer, chairman of parliament’s sports committee, said in a public statement Saturday that he personally is not in favour of setting the VAT at 14 percent.
“This rate is too much for poor and limited-income citizens to bear, especially at a time they gear themselves up to pay higher bills for electricity and water,” said Amer.
The leftist parliamentary bloc entitled the 25-30 group said they reject the VAT altogether.
In a press conference last week, the 25-30 MPs said the IMF agreement with Egypt – including the VAT – will be disastrous for the majority of Egyptians and could trigger wide-scale protests on streets.
Parliament will also discuss two laws related to regulating the employment of Egyptians in foreign countries and the entry and exit of foreigners on Egyptian land.
According to a report by the two committees on national security and the labour force, the first law will allow Egyptians wishing to work abroad to depart the country only after they pay higher fees.
“While a university graduate will have to pay EGP 200 instead of EGP 100, others will have to pay EGP 100 instead of 60,” said the report, adding that “this amendment will help the government perform its duties, with a view to the recent drop in the value of the Egyptian pound.”
Another report prepared by the committees of legislative affairs and national security said the second law allows foreigners wishing to work in Egypt to get permits only when they pay EGP 500 per visa instead of EGP 50.
It also imposes higher financial fines ranging from EGP 300 to EGP 1,000 on foreigners – instead of a fine ranging from EGP 100 to EGP 500 at present – found guilty of violating the articles of the law.
Parliament will also debate an agreement signed last April between Egypt and Saudi Arabia on nuclear power. The agreement aims to help the two countries exchange information and expertise on nuclear power stations on a systematic basis “due to the growing importance of this source of energy in recent years.”
On Monday, parliament is scheduled to debate a detailed report about corruption in the wheat supply sector. The debate comes after minister of supply Khaled Hanafi resigned from office last Thursday amid accusations of corruption and graft against him and in the wheat sector.
MP Magdi Malak, head of a parliamentary fact-finding committee on corruption in wheat supply, told reporters that the committee’s report was submitted to parliament speaker Ali Abdel-Al on 17 August and that the speaker has said that parliament will look into the report next Monday.
The report implicates officials within the ministries of supply, trade and agriculture. Malak said it will be up to MPs to decide whether the allegations levelled against these officials, at the top of whomis former minister of supply Hanafi, will be referred to the prosecution for investigation into alleged corruption and misuse of public funds.
MPs are also expected to use the Monday debate to direct more allegations against at Hanafi, with MPs including journalist Mostafa Bakri accusing Hanafi of misusing public funds.
Bakri alleges that Hanafi cost the Ministry of Supply EGP 7 million during his stay in a suite at Cairo’s five-star Semiramis Intercontinental hotel from February 2014 to August 2016.
Bakri, in a complaint filed against Hanafi with the prosecutor-general on 25 August, said “Hanafi’s shady and fraudulent practices are primarily to blame for corruption in the wheat procurement system, costing the country billions of pounds.”
“Why did Hanafi choose to stay in Egypt’s most expensive hotel and why should the Ministry of Supply foot the bill?” he said.
According to Bakri, “as the cost in a luxurious 131-metre suite (suite no.1038) in Semiramis Hotel is as high as $594 a night, I wonder how Hanafi was able to foot this exorbitant bill despite having a monthly salary of just EGP 30,000.”
In a press conference on Thursday, former minister Hanafi said he decided to resign for the sake of transparency and to allow prosecutors open investigation into the issue. Hanafi added that the accusations against him are “exaggerated” and that he will respond to them.
Source: Ahram Online