Coll 15/4 'Internal Affairs: financial situation' [‎14v] (28/246)

expressing his dislike of it and his hope that the commission would delay the
introduction of this measure as long as possible or else embody it in some tax.
He wished to avoid imposts of vexatious or inquisitorial character. He also
warned the commission against a tax on loans, as this would fall on banks, which
would already be taxed under the projected impost on movable wealth. A point,
he concluded in this connexion, which had given him much preoccupation was the
method whereby to touch the income derived from movable property and accruing
to companies “ en nom colleetif ” or of other constitution without limitation of
liability, and to private persons, merchants and manufacturers.
4. In his note of the 15th January to the Council of Ministers (pp. 11-22
of the enclosure) Sidky Pasha An Ottoman title used after the names of certain provincial governors, high-ranking officials and military commanders. outlines with succinctness and lucidity Egypt’s
fiscal system as evolved under the influence of the capitulatory system, and
describes the trend which its future development in an independent Egypt should
follow on the dual bases of equal taxation for all and restraint in the imposition
of new taxes. His Excellency foreshadows the eventual need for the introduction
of a general income tax, but observes that this should be the last and crowning
work of the fiscal edifice, not being brought forward until—
(а) The population has been familiarised with the other and simpler taxes
which it is proposed to place on the Statute Book.
(б) The real need for the revenue derivable therefrom has arisen.
5. To meet the new calls on the budget Sidky Pasha An Ottoman title used after the names of certain provincial governors, high-ranking officials and military commanders. advocates the immediate
adoption of a tax on income derived from property other than realty, an
inheritance tax and a stamp tax.
6. Examining the first of these proposed measures in some detail, the
Finance Minister enumerates the various sources of movable property income as
follows :—
(1) Agricultural land.
(2) House property.
(3) Commercial profits.
(4) Industrial profits.
(5) Dividends accruing from stocks and shares.
(6) Interest on loans.
(7) Professional services.
(8) Salaries, wages, allowances.
Of these, only (1) and (2) at present paid a direct tax to the State, whilst
under (8) the servants of the Crown paid a stamp duty, devised and so called under
the capitulatory regime in order to impose what was in effect an earned income tax.
In regard to (3), (4) and (7), the Ministry of Finance had in 1932 elaborated a
law—-the ,£ Patent^.” Law—to tax these, which had elicited various emendatory
recommendations by the Powers to whom it had been submitted for acceptance.
The basis of taxation set up in this draft measure of 1932—rental values—had
never appealed to the Ministry, and its choice was attributable to the capitulatory
regime. This principle was, however, admissible in respect of (7) as being a
method of taxing the business of professional men without intrusion into matters
of professional secrecy. Regarding (5), it was only fair that, where earned
income was taxed, unearned income should also bear its burden. Apprehensions
that this would lead to the flight of capital from Egypt could be scouted, since
the tax in Europe on unearned income was much heavier than what would be
proposed for Egypt. The rate contemplated was 10 per cent., and this would only
be attained after an interval of some years and starting from 5 per cent. The
tax would also apply to (6), every precaution being taken to prevent the incidence
of the tax being transferred from the lender to the debtor. Special measures
would be taken to this end. The tax on earned income (8) should be lighter
than that imposed on income from other sources, and the adoption of a sliding
scale from 1 to 3 per cent, and exemption for small wage-earners is advocated.
7. The establishment of an inheritance tax is briefly recommended by
Sidky Pasha An Ottoman title used after the names of certain provincial governors, high-ranking officials and military commanders. with the comments that this is an impost easy of collection and
unprovocative of hostility inasmuch as, whilst other taxes affect the product of
the taxpayer’s own efforts or of his own property, this one merely affects property
accruing to him without effort on his part.
8. Sidky Pasha’s allusion to the stamp tax is still more brief. It is a tax
very generally in use, not onerous in its incidence, and productive of a not
negligible revenue.