The Progressive Tax

The previous regime’s tax legislation placed everyone with annual incomes above 9,000 pounds (about $1,500) in one tax bracket at the rate of 10 percent. However, the proposed progressive tax distinguishes tax payers according to their incomes. According to this proposal, the tax rate increases with income, and this applies to both individuals and corporations.

Supporters of progressive taxation believe it is the ideal policy to achieve social justice since it imposes taxes on the wealthy, which increase along with their income. They hold that the progressive tax will help raise 30 to 40 billion pounds in annual revenue for the country, which could lower Egypt's budget deficit and reduce its foreign debt. Revenues from progressive taxation could also provide the state necessary resources to develop services, including health, education, and transportation.

However, opponents argue that the current tax rate is justified and that every individual should pay the same amount according to principle of citizenship where all individuals have equal rights and duties. Opponents also believe that a progressive tax will scare off investors who usually prefer tax exemptions and reductions. Finally, they argue, the practice would increase tax evasion since more people will try to conceal their true income to avoid paying higher taxes.

 


1– http://www.incometax.gov.eg/pdf/new-law.pdf
2– http://www.brookings.edu/papers/2007/06globalization_furman.aspx