Plans to introduce progressive taxation in Egypt have been rejected. The committee amending the country's constitution has abandoned plans to enshrine the principle as a guideline for tax policies, Ahram Online reported. The proposals were introduced by Mohamed Ghoneim, a renowned physician, prominent leftist and former leading member of the Egyptian Social Democratic Party. If accepted, an article regulating taxes on incomes and profits would have been introduced.
Ghoneim believes progressive taxation is key for achieving social justice, but sources from inside the committee told the news provider that there were concerns that such a measure would deter foreign investment, bringing "disaster" to the economy. Indeed, such a change would have ramifications for the Egyptian property market, which is valiantly struggling to keep its head above water amid continued uncertainty.
The debate over progressive taxation has been ongoing since the 2011 uprising, with some claiming those that earn more should contribute a greater amount to the state. However, some experts and business owners believe increasing state revenues via VAT, corporate taxes and property taxes is a more appropriate way to address the issue, Ahram Online explained. Such an approach is less likely to worry investors, it is claimed. However, increasing property taxes could still create a burden for overseas actors, while depriving the state of income generated through progressive taxation limits Egypt's ability to put money in social services and infrastructure.
However, the decision not to reform taxation will at least add some certainty to the property market - something Jones Lang LaSalle 's latest Cairo Real Estate Market Overview identified as lacking. Indeed, while the sector remained robust in the first half of 2013, its future remains uncertain. The performance of Cairo property in Q2 gives room for hope that the market will be able to withstand shocks, but until results emerge for Q3 it is hard to determine the true impact of civil unrest on real estate. Nevertheless, between March and June the average asking price for residential property increased by eight per cent quarter-on-quarter in Greater Cairo and New Cairo saw sales values of apartments rise by 11 per cent over the month.
Article by +Danny Bance on behalf of Propertyshowrooms.com