CAIRO: Thanks to a national campaign launched to garner awareness of the new tax law, Egyptians are beginning to pay their taxes, according to Minister of Finance Yousef Boutrous Ghali.
During a press conference held at the ministry yesterday, the minister presented the results of the first phase of the advertising campaign, which was launched in June 2005, shortly after the new law was passed.
At the end of March, the ministry’s record showed that 2,039,000 “natural persons (which is what the law defines private citizens as), filed their taxes, as opposed to the one million of last year; an almost 100 percent increase.
The minister also stated that the two million plus who filed taxes received a total of LE 1 billion in return on taxes, indicating a 224 percent increase from last year.
As for the ratio between those who pay taxes and those who don’t, this year witnessed a 40-50 percent ratio, compared to the 20 percent of last year, meaning that the number between those who paid and those who did not this year was relatively balanced, compared to last year, where the number of citizens who filed taxes were much lower.
“We are turning a new page, going in a new direction, says Boutrous Ghali. “This is a major success in our eyes, as there is a good response coming from the citizens as well as corporations.
According to the minister, the advertising campaign was created and launched in order to address private citizens’ main concerns, which previously stopped them from filing their taxes or playing with the numbers, so that they paid less than they were supposed to.
The campaign features several advertisements, which address concerns such as the clarity and relative ease of the paperwork involved and the lack of questions from officials based on what an individual filed as income from last year to this year. The campaign also highlighted the apparent benefits of filing taxes, such as creating greater job opportunities and receiving a substantial return on taxes.
“The point of this new law is to say what you want; whatever you claim you make, we will believe you, no questions asked, but you will be held responsible and accountable for your claims, says the minister.
He gives an example of one citizen, a prominent doctor, who, based on his paperwork, claimed to make LE 20 a year.
“Of course we don’t believe that, it makes no sense. But we did not question him, he says.
Under the new law, those earning more than LE 9,000 and less than LE 20,000 per year could pay up to 10 percent in taxes. Those earning LE 20,000 through LE 40,000 pay around 15 percent on that portion and anyone earning more than LE 40,000 has to pay 20 percent in taxes.
This makes for a great change compared to the old law, where individuals earning less than LE 50,000 were paying 20 percent in taxes and those earning more than LE 50,000 paid 32 percent in taxes.
“The law is simple; we are asking you how much did you put in and how much are you taking out, explains Boutros Ghali. “Twenty percent of what you are taking out is ours, thank you very much.
The minister also states that due to the clarity of the law, mistakes should be few and far between. “There shouldn’t be mistakes in your paperwork and, in fact, the number of mistakes we saw was much lower than the number we expected.
According to Boutros Ghali, if an individual or company’s mistakes amount to 10 percent or less of their paperwork, then they will receive a paltry punishment. However, if 80 percent or more of the paperwork has mistakes, then the individual or corporation will face major retribution.
“The law has given you its trust; we do not ask questions, we do not accuse you. But if you don’t work with the law, then you will face punishment, says the minister.
The minister requested at the press conference that the journalists convey the importance of people filing their taxes. While the deadline has passed, the ministry states that they will give individuals an opportunity until the end of April to file, without giving them any problems. However, after April, taxpayers will “no longer be welcome, according to the minister. “If you haven’t submitted your taxes yet, come now and we will figure out a solution together. But don’t come to us in December and expect to get away with it, says Boutros Ghali. “Come before I get you because when I do, I won’t let you go.
According to the minister, the new law is very accommodating to those who abide by it. If an individual ended up paying more taxes than they should due to a miscalculation of their financial assets, they receive a check in the mail with the difference. The same applies if an applicant paid less in taxes than they should have.
With regard to examining an application for foul play, the ministry states that the procedure is automated. All applicants’ paperwork is filtered into a computer, which then red flags an application if something in the paperwork seems out of the ordinary.
“If your numbers don’t add up, for example, then the computer flags you and we take a look at your paperwork. If we find a genuine, reasonable reason that your paperwork does not fit in the norms, then we let it go, without getting you involved. However, if the reason is not apparent to us or does not make sense, we call you and ask you to explain, and we take it from there, says the minister.
The minister also stated that the government will now concentrate its efforts into catching those who did not pay for their taxes.
Similar to the five-year campaign, which will address three phases: transparency and clarity, desire (to pay for your taxes), followed by attack, the ministry will now attack those who did not file their taxes.
“The examination is not just to see if a citizen paid or did not pay their taxes; it’s also for the citizen to get their fair share from the government, says Boutros Ghali. “And we have seen success in our campaign. The success wasn’t just for our ministry or in taxes in general, but it was the success of Egypt and the people, who are now showing us they want to change.
The ministry is aiming to make LE 60 billion from taxes, although they do not believe this will happen in the first year.
“If I took the national income of the country and pretended that Egypt was one taxpayer, 17 percent of that disposable income is the norm. Right now, we are getting 12 percent, which means people are not paying their taxes or cheating on them. So really this number is not very ambitious.
