Tunisia: Parliament Passes Draft Supplementary Finance Law 2019

Tunis/Tunisia — The House of People's Representatives passed, on Tuesday evening, the 2019 Supplementary Finance Law, with 109 votes in favour, 19 against and 5 abstentions, after two interruptions for parliamentary groups to consult and mutual recrimination between MPs.

Responding to MPs in Tuesday's plenary session on the draft Supplementary Finance Law for 2019, Finance Minister Mohamed Ridha Chalghoum said the tax burden in Tunisia cannot be compared with that of other African countries, which does not include social protection and health systems.

Chalghoum called for the figures to be put into perspective and put them in context, explaining that the tax burden in Tunisia is high (over 31%), because it covers social protection and health systems, but does not exceed 25% in reality.

The Minister pointed out that African countries have expressed at an OECD meeting their desire to achieve levels of tax pressure comparable to those of Tunisia, Morocco, South Africa and the Seychelles.

He explained the increase in the tax burden in Tunisia by the inability of the State to keep pace with development.

Responding to comments from MPs on the vagueness of the budget assumptions, he said his department was working to preserve macro-financial balances.

He recalled that during the preparation of the 2019 budget, the assumptions adopted were based on GDP growth of 3.1% and a barrel price of 75 dollars, reflecting the concern to increase the State's own resources by strengthening collection measures and combating tax evasion.

He explained the revision of the growth rate to 1.4% by the change in the world economic situation and falling demand, resulting in a 2.4% decline in exports from the mechanical and electrical industries and a 4.7% decline in exports from the textile, clothing, leather and footwear sector, at constant prices during the last 10 months of 2019, in addition to the failure to reach the targets set in the hydrocarbon sector.

The revision of the growth rate is also explained by the downward revision of growth on several occasions at the global level during 2019, due to the trade war between China and the United States, Brexit and regional tensions.

He also indicated that the decline in growth concerned the euro zone countries, Tunisia's partners, whose growth went down from 1.9% to 1.2% in October 2019, which led to a decline in demand for foreign companies based in Tunisia and therefore a 0.4% drop in growth.

At the national level, the Minister stressed that the downward revision of growth is mainly due to the decline in activity in the transport sector, all components combined, the delay in the entry into operation of the Nawara Field for natural gas extraction, owing to land problems and internal conflicts between the two companies operating this field, besides the decline in production from certain oil fields, such as Halk El Menzel and Al Barka.

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