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Al-Nagar shows disapproval of Egypt's new VAT

Al-Nagar shows disapproval of Egypt's new VAT
he House of Representatives approved the VAT rate at 13% - Photo Credit: Reuters

Cairo – Mubasher: Economic Expert Ahmed El-Sayed Al-Nagar criticized the value-added tax (VAT) on Monday, describing it as "a blind tax".

"The VAT is one of the indirect blind taxes, which are meant not to target a particular person or social bracket, but anyone who consumes VAT's products and services", Al-Nagar tweeted on Facebook.  

As the lower and middle classes are the overwhelming majority of the Egyptian society, the new VAT will put down heavy burden on none but the poor and middle-class citizens, Al-Nagar added, clarifying it is therefore inconsistent with social justice considerations.

Along with hikes in price, the VAT will result in redistributing income for property right's owners at the expenses of employees, which all in all will increase the disparity between the lower and middle classes, and the rich.

"If the government was trying to replace the sales tax with the VAT, its rate would have rather stayed unchanged as the lower and middle classes can bear no more burdens", Al-Nagar concluded. 

Yesterday, the House of Representatives approved the VAT rate at 13% rather than the 14% rate recommended by the government, but it will rise to 14% in the upcoming fiscal year.

The new law is expected to enter into force by nex October, Deputy Finance Minister Amr Al-Mounir told Mubasher on Sunday.