Egypt 2011/12 deficit grows surprise LE170 billion

[DJKeefy]

Pay rises for state workers and a drop in tax revenues caused a surge in the country's budget deficit last year, says finance minister.

Egypt's state budget deficit for 2011/12 was far higher than forecast, driven by a large increase in the state wage bill and a drop in tax revenues, the Finance Minister said on Tuesday.

In a ministry statement issued, Momtaz El-Said said the deficit was revised upwards from LE134 billion, 8.6 per cent of Gross Domestic Product (GDP), to LE170 billion, 11 per cent of GDP.

El-Said put the unexpected surge down to an 11 per cent increase in the state's wage bill. Expenditure on wages reached LE122 billion, up from the LE100 billion initially forecast.

The climb, the minister said, was prompted by new demands by Egyptian labour in the aftermath of the January 2011 uprising.

A drop in tax revenues was also to blame, El-Said said. Revenues fell by around LE25 billion, mainly due to a slowdown in economic activity, amplified by labour unrest.

"The demands of certain sectors in the society [workers] has had a very negative impact on production, leading to a drop in tax revenues," El-Said added.

Another reason for the increase in the defict, according to El-Saeed, was the rising international price of oil, which added some LE30 billion to the country's energy bill.

Source: http://english.ahram.org.eg/News/52520.aspx

[Chocolate Eclair]

This will grow and grow until someone gets a grip on the country, who Collects Tax, Who Enforces it? Who keeps proper books on profits and expenditure, its like the commodities, esitstimated for ages and then some local people get bills they cannot afford, they get their meter reemoved so then its a case of connecting to the nearest electric pole, again no one enforces this!

It obvious intake revenue will be at an all time low, there are no jobs for people, and when jobs come along they are so low paid these workers do not fall into the tax bracket, this may be done on purpose though, like a blaqck market job.

No they have got to get genuine people out there, seeing why so much money is getting lost or wasted, its no good letting the country go to the dogs!

If the deficit is partly due to the increase in International Oil prices there is something that can be done about this, so why not do it? every other country does it!

State wage bills are always a problem, if I remember they all got a 15% pay rise not so many months ago, but what was the increase in work turnover in return for this 15% increase. You cannot give increases of this size without some return.

Many of government departments are just leaking money, they are still working among reams and reams of paper work, when the answer should have been a 7.5% wage increase and the other 7.5% bringing Government departments into the modern world, "One Click" and we can bring your records up!!

Wieghed down in paper drowns any department, ie One day to find the File, another day to read it, and the third day to act on it...

Of course all what I say will not happen overnight, and the time it will take will get longer and longer, until investment gets catagorised.

[Chocolate Eclair]

Perhaps a Property Tax, would be a great earner for the Egyptian Tax Coffers, based on the Square Metreage of the property, and collected on a regular basis similar to Europe.

A system like this will bring in much wanted revenue that eventually will be able to be reinvested in Egypt.

You could again have a 2 stage Tax, one on Domestic Properties and one on Commercial Properties.

Until things like Raising Revenue to invest in the country are discussed and passed things are just going to amble on and the deficit get larger. The problem is there is no government in place to pass legislation such as this, and truth be known there has been no active government since the Revolution

[Dusak]

CHOC, about four years ago we were to pay property tax, the forms were quite complicated then so I arranged for a man from the council to come to my home and myself and about ten others had him check all the legal papers appertaining to each individual and fill in the forms correctly. This cost us 100Le each, or per property and took on average 45 minutes to complete. I think that our tax would have been about 350Le per year, but this being Egypt, it was all canceled about six months later. Wast of time and money.

[Chocolate Eclair]

Thats typical, so why bother about raising money for the coffers, if they go through all this just to cancel it then it will be impossible to raise money for the coffers at all...Wonders never seem to amaze