Cairo- Tax revenues are the cornerstone of the government’s general budget structure in Egypt, and its importance in the new budget to be applied in the middle of this year.
The Egyptian government revealed unprecedented growth of tax revenues exceeding 40%, to account for more than 83% of the total new budget revenue 2025-2026, making it the largest resource of the state.
This growth, which the government described as historic, raises questions whether it reflects the efficiency of collection and the expansion of the tax base, or that it comes at the expense of increasing burdens on citizens and companies in light of economic reforms.
Expansion or increased taxes?
The expansion of the tax base is the main concern of the Egyptian government, whose efforts focus mainly on stimulating voluntary compliance to attract new financiers, and Finance Minister Ahmed Kajuk emphasized this priority, explaining that the goal of increasing the number of financiers is to enhance the state’s ability to provide more facilities to all parties.
And tax revenues increased 38.4% during the period between July and February to 1.234 trillion pounds (24.3 billion dollars), from 892 billion pounds ($ 17.6 billion) during the same period of the previous fiscal year, according to this detail:
- The value of the value -added tax increased by 39% to record 573 billion pounds (11.3 billion dollars).
- The commodity tax revenue jumped 54.3% to 327.6 billion pounds (6.5 billion dollars).
- The value of the tax on services increased by 34.8% to 76.6 billion pounds (1.5 billion dollars).
Standard financing gap
Despite the growth of taxes, the financing gap in the project of the next fiscal year budget increased by more than 25% to 3.6 trillion pounds (71 billion dollars), which included:
- Targeted revenues: 3.1 trillion pounds ($ 61.4 billion).
- Expected expenses: 4.6 trillion pounds (91 billion dollars).
- The expected deficit: 1.5 trillion pounds (about 30 billion dollars) does not include debt installments.
In the budget for the new fiscal year 2025/2026, whose total uses amounted to 6.761 trillion pounds (about 133 billion dollars), 64.8% of which were allocated to spending on benefits, which are estimated at 2.3 trillion pounds (45.4 billion dollars), and loans, which amounts to about 2.08 trillion pounds (41.1 billion dollars).
Funding deficit
The Ministry of Finance plans to cover the budget deficit by issuing new domestic debt tools worth 2.2 trillion pounds (43.4 billion dollars), including:
- Cabinet: 2.2 trillion pounds.
- Treasury bondsBy about 928.9 billion pounds.
The Ministry intends to issue international bonds worth at least $ 4 billion during the next fiscal year, as part of a program for issuing international bonds worth $ 8 billion.
Cancel some tax exemptions on a number of commodities
The Chairman of the Parliamentary Plan and Budget Committee, Fakhri Al -Faqi, attributed the remarkable increase in the tax proceeds to “new legislative packages, activation of mechanization and electronic bill, and the abolition of exemptions granted to the public business sector, economic bodies and the army.”
In an interview with Al -Jazeera Net, he indicated that the government has applied tax and customs facilities without imposing additional burdens on citizens, expecting that the value -added tax (14%) of 1.1 trillion pounds (21.6 billion dollars) will lead the target state revenues of 2.6 trillion pounds (51.2 billion dollars) in the next fiscal year.
Al -Fiqi revealed a governmental orientation to cancel some of the current tax exemptions applied on about 57 commodities and service with the aim of enhancing revenues, in addition to some goods and services covered by the table tax (a tax imposed in special proportions or with specific values) only in order to change the conditions that have previously required these exemptions.
This list includes goods and services such as sugar, tea, milk, eggs, fish, insurance, education, land transport, health, and others.
The tax revenue constitutes about 83.4% of the total expected revenues of 3.1 trillion pounds (61.1 billion dollars) in the budget next year.
Unrefined tax policy
The head of the Economic and Social Rights Unit of the Egyptian Initiative for Personal Rights (independent), Wael Jamal, criticizes the neglect of the government, to address the weak taxes imposed on the wealthy and its focus on increasing taxes on consumption, considering this a heavy burden on citizens that comes at the expense of adopting radical economic reforms.
He says in a comment to Al -Jazeera Net that the major increase came from the value -added tax that witnessed an unprecedented leap, in addition to many increases in the fees, adding that the government’s focus on increasing consumption taxes (goods and services) comes at a time when inflationary waves are still high and increase prices, which constitutes an additional burden on citizens.
Jamal adds that the government translates the expansion of the tax base as extending taxes into exempt additional commodities such as imposing a sugar tax for the first time in the new budget, rather than treating the defect in the tax structure that makes corporate taxes (with the exception of the Petroleum and the Suez Canal) very weak.
He explains that converting the burdens to the lowest incomes by increasing consumption taxes, in light of the weak professional taxes and the wealth, property and real estate that the rich are supposed to pay, is an easy political choice for the government due to the weakness of the union organization of these segments compared to the influence of businessmen. He believes that this policy increases the severity of poverty and inequality in light of the already bad economic situation.
