Egypt tax revenues increase 16 pct in 2010/11

Finance Minister Samir Radwan pointed out that the increase in tax revenues, which could mitigate the impact of the revolution on the economy, came up about LE 3.738 billion above the target, which was set at LE 165.993 billion, Egynews.net reported.

Despite the effects an increase on taxes may have on business during this turbulent period in the country’s economy, Ahmed El-Emam, owner of Tour Egypt, said that it might be the country’s only way out.

“Given the way the country’s rolling over the past weeks, tax raises may be the solution because cutting spending and cutting wages is not an option right now,” said El-Emam. “We can’t turn to taxing wages or cutting salaries, it would create more discontent during this time where people are already protesting all over the country.”

According to the breakdown of the tax revenues, LE 25.628 billion came from a tax on capital companies, LE 4.774 billion from commercial and industrial tariffs, LE 11.683 billion from a tax on salaries, LE 7.237 billion from stamp taxes, and LE 300 million from taxes on private businesses.

El-Emam, however, warns that while increasing taxes now is needed, the effects of the increase might backfire.

“Increasing taxes for business is like surgery, you have to do it, but you don’t know if you're going to come out of it safe because it might bring down business and it will result in some businesses evading taxes,” he said.

“More effective taxes would be on things like cigarettes, but I’m doubtful that putting pressure on businesses during this time will help stimulate the economy; as a business owner, I will pay these taxes, but I might have to cut employees as a result, so that could actually be seen as hurting the economy.”

At the conference, Radwan also said during the first half of fiscal year 2010/11, profit from the Suez Canal and the private sector of petroleum saw an increase, along with a rise in the demand of consumer goods, which also helped boost growth.