Benkhalfa: “Tax Imposition Hinders Algerians To Create Wealth”

Former Finance Minister Abderrahmane Benkhalfa said on Monday that the newly created wealth tax, though part of it is a tax-neutral policy, could curb the Algerian citizens’ determination to create wealth.

“The tax policy pursued by Algeria is based primarily on the profitability of the tax liability and secondly on what he called tax equity, which is a difficult equation, especially in increasing tax revenues without putting pressure on consumers or investors,” Mr Benkhalfa said in a special program of the national radio.

And whether the policy of “where have you this” – within the wealth tax or the tax of financial dues as described by Mr. Benkhalfa  could alienate investors and intimidate them, stressing that “proper incentives by the public authorities in this respect will boost the resolve of those who want to create wealth transparently and not through money laundering,” .

He added that the government must foster fairness and equity and should not rely on this newly-created wealth tax for financing because its size won’t be very significant, adding that a 0.2 percent hike in value-added tax could generate tax revenues ten times more than the income tax on wealth.

“The budget of 2017 was in the range of 6 billion dinars, while in the Finance Act 2018 it is set at 8 billion dinars, which makes the efficiency of carrying this tax-related action rather difficult”, he further explained.

He added that while oil countries such as Qatar and Saudi Arabia have resorted to reducing their budgets, Algeria has entered an upward trend of about 2,000 billion dinars, by stepping out of the budgetary resources to non-monetary resources, which he dubbed as “conservative” notably (IRS, TVA, IRG), with social transfer funds and subsidies not declining for that matter.

“The growth rate should be increased because Algeria needs 9-10 thousand billion dinars a year. Instead of coming from taxes and budget, we have to bring it from market resources, both internal and external, through direct profit-yielding investments,” he underlined to this effect.