CAIRO - The new State budget has hit an unprecedented peak with figures reaching LE134 billion ($23 billion). The previous governments imposed higher duties on vehicles, cigarettes or raised energy prices to meet budget demands. However, it is difficult in this transitional period to take similar action because the ministers of the current Cabinet are only caretakers. Foreign borrowing is dismissed by general consent, since future generations would have to bear the consequences. The military council and the current Government have decided to consult business organisations to look for new ways of filling the State coffers. Mohamed Farid Khamis, the head of the Egyptian Investors' Union, suggested to raise the maximum tax imposed on profits by 30 per cent, if businessmen and investors approved of the idea. But Egyptian investors dismissed Khamis' suggestion, claiming that it came at the expense of investors and businessmen. They expressed their objections during a meeting of the American Chamber of Commerce in Cairo, organised by the tax committee. This Chamber includes Egyptian companies trading with the US through import or export. Hassan Hegazi noted that Khamis' suggestion would negatively affect the investment climate and discourage major investment companies from getting involved in Egypt. For his part, Mohamed Hussein Guinedi, the head of the Independent Manufacturers Association, stressed that they were looking into the whole tax system and hoped to come up with practical solutions. The investment climate should not be affected in a negative way, particularly at the present time, he added. But there were investors who supported Khamis' suggestion, with the condition that taxes should only be raised for a couple of years until the current economic problems were solved. Safwan Thabet, the head of the 6th October Investment Association, also approved of raising taxes if a series of measures were implemented, for example reducing the energy subsidies. It is worth mentioning that energy subsidies exceed LE100 billion in the State budget. Mohamed el-Bahi, the head of the Customs Committee affiliated to the Industry Union, offered another solution. State revenues could be increased by abolishing sales tax exemptions; it would stop many companies from not paying taxes. El-Bahi stressed to Al-Wafd newspaper that this option would lead to four times the current sales tax revenues, which amounted to LE 60 billion. He pointed out that according to a study, 75 per cent of industrial facilities didn't pay sales taxes. Hany Qasseis, the Secretary General of the Egyptian-Ethiopian Business Council, called for imposing double taxes on luxury vehicles, yachts and private jets in addition to raising the duty on foreign cigarettes. There was an urgent need to adjust energy prices, particularly concerning plants with high consumption; it did not make sense that these plants received energy subsidies, he added.
