aCAIRO: Egypt's notorious property tax law proposal sparked controversy Sunday among MPs, with supporters saying the proposal will only tax a few Egyptians and opponents saying it will overstrain the majority and that the levy should be further reduced. "The proposed property tax will only apply to 2.1 percent of Egyptians, who own property valued above LE 500,000, said Minister of Finance Youssef Botrous Ghali during the session. He added that the draft bill exempts property valued at less than LE 500,000. "Property valued at more than LE 500,000 constitutes a minor percentage of Egyptians, as the majority of the population lives in dwellings valued below LE 200,000 such as houses in villages and shantytowns, the minister was recently quoted as saying in Al-Ahram Daily. The property tax law proposal was under discussion Saturday and Sunday at the People's Assembly. After a long heated debate, the parliamentary session was adjourned without ratification of the draft bill of the property tax law. Initially, the legislation identified a threshold of LE 250,000 for the value of property below which real estate in Egypt is exempt from the tax. However, facing growing criticism, the draft bill was amended several times to include a higher threshold that is now below LE 500,000 of a property's value. Property valued above that figure will be taxed based on assessment of annual rental value. Under the new legislation, property on the North Coast and on newly established suburbs will be subject to the property tax, which adheres to social solidarity and supports poorer segments of society, said Ghali. The proposal, currently under discussion in Parliament, stipulated a levy at 10 percent of a property's annual rental value, compared to the previous 12 percent. It also capped the maximum adjustment ratio for a property's value - calculated every five years - at 30 percent, down from 40 percent. According to Beltone Financial, the government under the new law could generate up to LE4 billion per year versus the currently generated LE500-700 million. However, the drat bill triggered heated debate iat the PA, with voices of opposition unexpectedly coming from the ruling National Democratic Party (NDP) veterans Kamal El Shazli and Zakaria Azmi, along with other opposition leaders. "We want to push forward a package of amendments to the proposal, similar to what happened in the Shoura Council, in order to unburden Egyptians, said Azmi, objecting to the proposal. The draft bill also faced severe objections from independent MPs, with Moustafa Bakry saying that MPs received the proposal booklet - distributed by the NDP committee - only a few hours before holding the session, which resulted in a rushed discussion that lacked proper assessment. Other opposition members argued that the proposed law was unconstitutional, as it tampers with private property. On that note, PA Speaker Fathi Sorour intervened saying the draft bill complies with the Constitution, based on a law passed in 2002. Before suspending the session, the NDP's Azmi suggested several amendments to the draft bill. Main amendments included raising the threshold to LE 700,000 instead of the proposed LE 500,000, identifying a levy at 8 percent, down form 10 percent of a property's annual rental value. The maximum adjustment ratio for a property's value is to be evaluated every seven years - up from five. Azmi also suggested capping the maximum adjustment ratio at 20 percent, down from 30 percent. On the other hand, the Shoura Council gave early this month the green light to the draft bill of the property tax law folllowing extensive discussions. The Council's main amendments to the draft bill included raising the exemption threshold to LE 450,000, reducing the tax rate to 12 percent of the rental value, and capping the maximum adjustment ratio for a property's value - every five years - at 35 percent.
