When it comes to the new tax law, there is no room for spin says Taher Helmy*
The term "spin-doctor" was coined during the US presidential debates between Reagan and Mondale some 20 years ago and is now in usage around the world. In a billiard game, putting "spin" on a ball means getting it to move in a desired direction. Likewise in politics, advertising or public relations it means manipulating public opinion. The practice of bending truths to suit one's purpose is a human weakness with which we are all familiar. But adjusting information to serve political aims (or "news management" as spin is also called) is a more calculated business, and one that can often backfire. Relying on spin instead of facts to earn public support can produce the opposite effect: a loss of credibility. In fact, "spin-doctor" has negative connotations, since it refers to those whose job it is to make things seem better than they really are, and so to disrespect and underestimate the public's intelligence.
Egypt's new cabinet members distinguished themselves by rejecting this approach, which has dominated world politics, not only Egypt's. Avoiding hard truths does not make them go away; it only impairs the ability to cope with them. Prime Minister Ahmed Nazif, Minister of Industry and Foreign Trade Rasheed Mohamed Rasheed and Minister of Investment Development Mahmoud Mohieddin, have all demonstrated their willingness to address the public -- and each other -- openly. This was recognised and appreciated by the public, and helped create a sense of fresh optimism in the market.
Rasheed, for example, dealt with the potentially volatile QIZ issue transparently. He published the terms of the agreement in the press; he travelled around Egypt meeting with governors, members of parliament, the Shura Council and business organisations to discuss the issue without glossing over the facts. He was honest about the sensitivities involved while stressing that the policy was nevertheless a necessary and positive economic move. The result was general acceptance, with people even complaining of being excluded from the QIZ zones. Mohieddin demonstrated the same straightforwardness in addressing public sector privatisation issues and investment policy matters. In these and other instances, the new cabinet has placed a premium on transparency in communication as the best and only way to earn the public's trust.
That is why it is crucial, in the case of the newly drafted tax law, to maintain direct and open lines of communication. The new law's objective is to expand the tax base and build state revenue by attracting greater public participation with reduced taxes and raised personal and family allowances. This aim can be achieved only if the public is given accurate information, understands the new system's benefits and decides to buy in. Over the last couple of years, I have advocated many of the features that were incorporated into this new law and I support its basic principles as positive. Like any system, however, it cannot satisfy everyone, but has significant advantages that should be explained exactly as they are.
Among the new law's features is a substantial reduction on the taxes payable in most brackets. This will have a reasonably positive net effect on people's income. The law will reduce discretion on behalf of the tax authority by simplifying rules, by using random audits rather than intrusive annual ones, and by granting amnesty with regards to past tax filings. The law will also remove inconsistencies and distortions to the economy that exist under the existing legislation. The point is: we need not exaggerate the benefits of the new law. It is enough to present them as they are, because their underlying philosophy is sound.
In an ambiance of openness, constructive debate is healthy and to be expected. In fact, the tax law has attracted plenty from civil society groups like the Federation of Industry, chambers of commerce (including AmCham), in addition to law and accounting firms. All have specific recommendations and comments that are worth listening to, especially if we want to promote transparency as the best means of gaining public confidence and support. We need to be flexible and, if necessary, to adopt new provisions or introduce compensations elsewhere, so long as the main thrust of the law is maintained. No law is perfect, but with less rigidity and a more open-minded approach we can reach the level of consensus necessary for Egypt to achieve its goals.
The task is to expand the tax base while forging a solid and constructive new partnership between people and government. The final content of the new law, and the way it is communicated to the public, will determine the success of this goal. There is no point in squandering the seeds of fresh confidence and credibility by making the new law appear unrealistically better. Egypt's urgent need for public support of deep reform leaves zero room for spin.
* The writer is a prominent lawyer and the President of the American Chambre of Commerce in Egypt