Tunisia will not impose new taxes on its citizens in 2019, and will cut the tax burden for some sectors to boost growth, that’s according to a draft budget.
This development comes after years of tax increments that have stoked public anger and sometimes violent protests.
According to Reuters news agency, Tunisia’s economic growth for 2019 is projected at 3.1 per cent, up from an estimated 2.6 per cent this year. It expanded by 1.9 per cent last year.
According to Prime Minister Youssef Chahed, 2018 is the last difficult year for Tunisians, though his government is under pressure from the International Monetary Fund (IMF) to trim the budget deficit by cutting subsidies and reforming the public sector.
The draft budget for 2019 shows an 8 percent increase on this year’s, totalling about $14.21 billion. It did not say how the expansion would be funded.
It also showed the budget deficit falling to 3.9 percent of gross domestic product in 2019, from about 5 percent expected this year.
Tunisia has financing needs worth 10 billion dinars next year, including 7 billion dinars of external borrowing – almost the same level as this year, an official told Reuters last month.
Tunisia, praised as the only democratic success among the nations which experienced “Arab spring” revolts, has relied much on foreign loans in recent years.
The government will halve tax for companies operating in various sectors including technology, textiles, engineering and pharmaceuticals to 13.5 percent from 25 percent, the draft showed.
This year’s budget raised taxes on cars, alcohol, telephone calls, the internet, hotel accommodation and other items in an effort to help balance the books.
Taxes on bank profits were raised to 40 percent from 35 percent. Ihe government also raised this year by 1 percentage point the value-added tax and imposed a new 1 percent social security tax on employees and companies.
