Morsy suspends tax plan, calls the increase a ‘burden’ on average citizen

President Mohamed Morsy has decided to suspend wide-ranging changes to the country's tax laws that had been signed earlier this week but just came to light Sunday, calling for "societal dialogue" and further consultation before implementing them. 

In an announcement early Monday morning, Morsy said the taxes would amount to an "additional burden" on the average citizen. 

"The president of the republic feels the pulse of the Egyptian street, and he realizes how much the citizen is bearing and struggling from his burdens in this difficult economic period," the statement said, according to the website of the state-owned newspaper Al-Ahram. 

The statement also said the president had found that the laws would mean a large increase in the cost of living for most people, and added that the tax increases would go into effect only after public dialogue and consultations with experts produced a plan agreeable to everyone.

"The voice of the people is always louder and always has the last word," the statement said. 

The tax plan, signed into effect unceremoniously on 6 December, was not made known to the public until Sunday. The extensive changes would have increased taxes on cigarettes, soft drinks, alcohol, cooking oil and energy. 

The plan also would have levied new licensing taxes and property taxes, and increased the tax rate for higher-income brackets. Officials had said the tax plan was part of the economic program Egypt prepared for the International Monetary Fund during its visit to Cairo in early November to obtain a US$4.8 billion loan from the fund. IMF officials are set to finalize the loan agreement on 19 December in Washington DC.

The Muslim Brotherhood’s Freedom and Justice Party had also rejected the taxation plan.

The party, in a statement published Monday on its Facebook page, asked Prime Minister Hesham Qandil to postpone the plan until a new parliament is formed.

The FJP said it “does not accept issuing decisions that affect large segments of the society while Parliament is absent, and that are made by a transitional government that has yet to introduce its budget and economic program to parliamentarians.”

The party said it was “surprised” by the decision being circulated by media outlets.

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