Tu­nisia par­lia­ment re­jects tax re­forms

Kuwait Times - - BUSINESS -

TU­NIS:

Tu­nisia’s par­lia­ment has voted against two ar­ti­cles in next year’s budget im­pos­ing taxes on lawyers and phar­ma­cists, in a blow to gov­ern­ment ef­forts to cut the deficit and im­ple­ment eco­nomic re­forms. The vote late on Thurs­day came a day af­ter the gov­ern­ment back­tracked on plans to freeze pub­lic sec­tor wages in 2017 fol­low­ing a deal with the powerful UGTT union. These re­ver­sals raise ques­tions about Prime Min­is­ter Youssef Cha­hed’s prom­ises to im­pose eco­nomic changes to re­vive the bat­tered econ­omy. They could also deepen the coun­try’s fi­nan­cial dif­fi­cul­ties in 2017.

Fi­nance Min­is­ter Lamia Zribi said Tu­nisia would need $3.7 bil­lion in for­eign loans in 2017, $1 bil­lion more than an­tic­i­pated two months ago. The agree­ment signed on Wed­nes­day with the UGTT will cost the gov­ern­ment about $418 mil­lion next year alone. Lawyers had cam­paigned against the planned taxes and held three na­tion­wide strikes in a month and demon­stra­tions in front of par­lia­ment and the prime min­is­ter’s of­fice. The UGTT had threat­ened a pub­lic sec­tor gen­eral strike but called it off af­ter the com­pro­mise deal.

In a tense ses­sion in par­lia­ment, law­mak­ers from the gov­ern­ing coali­tion - many of them at­tor­neys by trade - re­fused to back the pro­posed taxes for lawyers, which would have im­posed a charge rang­ing from $8 to $25 for each file pre­sented in court. De­spite hold­ing a com­fort­able ma­jor­ity in par­lia­ment, the gov­ern­ment also failed to push through a tax on im­ported drugs, a mea­sure over which phar­ma­cists had threat­ened to strike on Dec. 14.

A mea­sure re­quir­ing lib­eral pro­fes­sions in­clud­ing lawyers to in­clude their tax code on of­fi­cial pa­pers was in­tro­duced, but an­a­lysts were skep­ti­cal about whether it would help re­duce tax eva­sion. Zribi said about half of Tu­nisia’s 8,000 lawyers do not de­clare their in­come. Tu­nisia has won praise for its demo­cratic tran­si­tion fol­low­ing an 2011 up­ris­ing. But suc­ces­sive gov­ern­ments have failed to cre­ate jobs or cut the pub­lic deficit. Cha­hed was brought in as prime min­is­ter by Pres­i­dent Beji Caid Essebsi in the sum­mer to speed up eco­nomic re­forms de­manded by in­ter­na­tional lenders.

Eco­nomic an­a­lyst Moez Joudi said the coun­try’s fi­nan­cial po­si­tion could worsen next year af­ter the back­track­ing on budget mea­sures. “It was the wrong mes­sage to send to tax evaders, to all Tu­nisians seek­ing tax jus­tice and also to in­ter­na­tional lenders af­ter the rul­ing coali­tion par­ties had an­nounced their sup­port for re­forms,” he told Reuters. — Reuters

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