CAIRO - By toppling Mubarak's regime and his corrupt government, the people thought that they would get rid of all the tyrannical legislation and policies that successive governments had imposed on them and caused their impoverishment. One example of such ill reputed legislation is that pertaining to the property tax, which former Minister of Finance Youssef Boutros Ghali fought to impose on housing whose value exceeded LE500,000. To the people's surprise, the ruling Supreme Council of the Armed Forces (SCAF) has recently announced that it will start implementing the controversial law from the beginning of next year. This announcement provokes the question: So, what caused the freezing of the law after the success of the January revolution and what is the reason for now enforcing it? Tareq Farrag, the Chairman of the Property Taxation Department, noted that the property tax had not been frozen as such as claimed by some people but merely delayed for a while to calm the public anger. In an interview with the Radio and TV Arabic magazine, Farrag defended the tax on the grounds that it targetted the rich and not poor or middle-class people. However, he referred to the ongoing negotiation over increasing the minimum exemption on the building to those of LE one million in value. “Even if such amendment were not endorsed, the LE500,000 value of the property, to be subjected to the new tax, is not that high as its owner would pay no more than LE3.330 per year,” Farrag pointed out. Meanwhile, people opposing the law attribute their stance not to the amount of the tax they would be paying on the housing whose value is LE500,000 or LE one million but to the principle of not taxing the house a person is living in and not gaining profit from it. Meanwhile, Farrag, who admitted that the present Minister of Finance Hazem El-Beblawi would be pushing for the enforcement of the law, referred to the expected LE one billion, which would be raised in the first phase of the tax and would enhance the State budget. What causes the public anxiety about this tax is the re-valuation of their housing every three to five years, which means that it might possibly reach the minimum taxation limit one day, even though its original value was very low. “No-one would benefit from any theoretical rise in the value of their house except in selling it. So, how could one pay taxation for the house they are living in because the State valued it at some LE500,000 or more, today or tommorrow?” Hamdi Abdel-Azim, the former Dean of Sadat Academy asked. Dr Abdel-Azim insists that taxes should be levied on a person's income and not their possessions, especially given that this possession had been purchased by means of a person's income, which had been already subjected to taxation. “This double taxation is unconstitutional.” Concerning industrial and tourist institutions, the law could be enforced without causing additional harm to these institutions, Farrag emphasised. Apparently, the Government as well as SCAF have made up their minds to resort to implementing this taxation law at the beginning of January as a solution for creating new financial resources to lessen the present deficit in the State budget. Meanwhile, Ashraf Abdel-Ghani, the Board Chairman of the Egyptian Society of Taxation Experts, warned againt rushing to enforce at such a sensitive stage and of the expected public opposition to it. He stated, “There are many reservations held about it and public demands made for some radical amendments to the new law that caused the Government to freeze the law for some months now, and it is not the right time yet to enforce this controversial law.” The crucial question is, if the aim of this tax, as the officials claim, is to enhance budget deficit with the assistance of rich people, why does the Government of Essam Sharaf not follow the example of US President Obama's administration, which is considering levying additional taxes on rich people to cope with the financial crisis hitting the United States?
