THIRD GENERATION ECONOMIC REFORM:
President Hosni Mubarak yesterday signed the new income tax law, which reduces tax rates by 50 per cent. This long awaited move comes in the wake of economic reforms adopted by the new cabinet, appointed last July, and is likely to be followed by other changes.
"This approach to formulating the new income tax law has paved the way for similar changes in other laws governing other sources of state revenue," Mubarak pointed out during the signing ceremony, attended by Prime Minister Ahmed Nazif, Finance Minister Youssef Boutros-Ghali and representatives of both the public and private sectors. In a notable gesture, the signing was also attended by former chairman of the leftist Tagammu Party, Khaled Mohieddin, who had declared his intention to run for the presidency in next September elections.
"In the next period a new policy package will be launched aiming at enhancing both investments and savings." Mubarak also revealed plans to pump some LE50 billion into the banking sector.
Two days before, the People's Assembly had ratified the law, the subject of several months' debate in economic circles. "This signing," President Mubarak went on to point out, "represents a turning point in our economic policy -- the start of a third generation of economic reforms based on encouraging the private sector and perceiving it as a full partner in the development process."
The new law is also removing all tax exemption status previously rendered to companies operating in newly-established industrial zones. New companies to be established in these zones will no longer benefit from the 10-year tax exemption hitherto granted. According to Boutros-Ghali, speaking at the Budget and Planning Committee meeting in the People's Assembly on Monday, the tax reduction stipulated by the new law will cost the treasury some LE3.6 billion a year, "to be re-gained, hopefully, within three years' time, thanks to the economic revival the new tax reduction will give rise to".