Egypt is studying a proposal to increase taxes on high earners, as it seeks to cut a budget deficit that’s set to miss this year’s target, the finance minister said.
The plan under consideration would impose a 5 % annual tax on the top incomes for a period of two or three years, Hany Kadry told reporters in Cairo today. He didn’t give further details, saying they’ll be be announced if the proposal is adopted.
Egypt’s budget deficit in the fiscal year that ends in June is expected to be between 11 % and 12 % of gross domestic product, above the 10 percent target, Kadry said. The government aims to bring that down to between 10 and 10.5 % next year, he said.
Egypt’s economy has been hit by the escalation in violence and unrest that followed the July ouster of President Mohamed Mursi by the army, adding to the turmoil that has kept tourists and investors away since the 2011 uprising against Hosni Mubarak. The government has announced plans to boost public spending and the central bank cut its key interest rates three times in the second half of 2013 in a bid to spur growth.
Kadry said he expected GDP growth of between 2 % and 2.5 % in the current fiscal year. Planning and International Cooperation Minister Ashraf el-Arabi said this week that political turmoil will probably keep growth below the government’s 3 % to 3.5 % target.