Proposed Wealth Tax Project: A Solution for Greater Equity and Social Justice?
The proposed wealth tax project, introduced by the Ministry of Finance as a solution to achieve greater equity and social justice in tax collection and to replenish the state's coffers, has sparked controversy since its announcement and examination by the deputies of the ARP.
It is essential to note that this initiative, which concerns individuals with a fortune exceeding three million dinars, provides for an annual tax levy of 0.5% on fortunes not exceeding three million dinars, including assets, movable and immovable property, shares in companies, and land titles, as well as a tax of 1% on fortunes equal to or exceeding five million dinars. The wealth tax is not a new idea, as it has already been debated in the past in several Arab and European countries, notably in France, where this initiative was met with a cold reception by the main categories concerned, who see it as a way to push them to settle elsewhere under more favorable tax skies.
In Tunisia, the initiative was proposed without being accompanied by a real debate on its effectiveness. What is surprising, however, is that this bill was discussed in the ARP without any official data being presented on the number of wealthy individuals in Tunisia and the exact value of their fortune and assets.
Key Questions and Concerns
- How can the effectiveness or scope of such a reform be evaluated in the absence of a detailed tax map of official and informal fortunes?
- According to an expert's intervention on a private radio station, if the wealth tax were to pass, its revenue would be insignificant, as it could generate an amount less than eleven million dinars, which is derisory compared to the needs of rebalancing public finances, making the project more counterproductive than productive.
- Furthermore, this increase in the tax burden risks pushing individuals who have enriched themselves from the informal economy to redouble their ingenuity to evade taxes and accelerate the conversion of their assets to circumvent this tax pressure, which would only encourage and amplify money laundering.
- For already known wealthy groups, it could lead to a decrease in their contribution to national savings and a regression of income redistribution through formal economic channels.
Impact on Financial Equilibria
In what measure, then, will the adoption or non-adoption of this tax measure impact financial equilibria? The proposed wealth tax project has significant implications for Tunisia's financial landscape, and its potential consequences must be carefully considered to ensure that the desired outcomes of greater equity and social justice are achieved.
