(3 minutes read)
- Tunisia will go without seeking an IMF bailout. For this, the government is readying a plan to tax the super-rich. Tunisian President Kais Saied proposed the introduction of additional taxes on the country’s wealthiest people to do away with the IMF loan, which has various conditionalities including phasing out of the subsidies, which are mainly directed towards poor people
Tunisia will go without seeking an IMF bailout. For this, the government is readying a plan to tax the super-rich. Tunisian President Kais Saied proposed the introduction of additional taxes on the country’s wealthiest people to do away with the IMF loan, which has various conditionalities including phasing out of the subsidies, which are mainly directed towards poor people.
According to Mr. Saied, the system of subsidies for basic products currently in place benefited all Tunisians, including the wealthiest. That rationale has led to evolving an architecture wherein surplus money from the rich is taxed and giving it to the poor, which, he said, was in line with Islamic laws. The government, he explained, thought Instead of lifting subsidies in the name of rationalization, it would be possible to introduce additional taxes for those who benefit from them without needing them.
Tunisia in April rejected the conditions of the IMF, which made granting of a loan to Tunisia, provided the country carried out economic reforms including the lifting of certain state subsidies. However, the president did not specify how many new taxes might be introduced in a country where employee taxes are deducted at source. A large proportion of Tunisians working in the private sector do not declare their income to the tax authorities, despite the country being one of the most indebted countries in the world.
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Public debt constitutes over 80 percent of the GDP. Tunisia obtained an agreement in principle from the IMF in mid-October for a new loan of almost US$2 billion. But there was heavy pressure on the government not to phase out the subsidies because of the perceived harmful effect on poor people.
