CAIRO: Egypt's Ministry of Finance will increase the tax on cigarettes over the next five years as part of a series of measures to achieve financial stability and sustainability in the country after its recent overthrow of a 30-year regime and economic downturn. Stabilizing the economy requires reducing the total public debt to between 60-65 percent of GDP by the 2015/2016 financial year. An official source at the ministry said it is reconsidering the uses of funds and special accounts through the framework of a unified treasury account, and the completion of the mechanization of government payments. The source added that achieving this requires pushing the deficit to 4 percent of GDP, which in turn requires the set of actions that include the application of VAT as opposed to the present sales tax law, consolidation of the tax rate, raising the registration threshold, and the rationalization of exemptions of income tax. The source revealed that these measures include amendments to the Income Tax Act, expand the tax base and reduce exemptions. The increase in taxes on cigarettes would be applied gradually over the next five years to reach to the world rate. The source added that the new pension system emphasizes the sustainability of the financial situation of the state, pointing out that the ministry was considering ways of reforming the system of support through more effective mechanisms and developing frameworks for control and development of systems of economic organizations, and the development of new pricing policies, in addition to resolving the financial entanglements between state agencies . Among the measures to achieve financial stability emphasizes the need to rely on financial partnership between the public and private sectors to finance more investment projects and providing public services.
