Egypt is proposing raising the sales tax on steel to 8 percent from 5 percent and imposing a 5 percent sales tax on cement instead of the current flat fee per tonne, newspapers reported on Wednesda...

  Egypt is proposing raising the sales tax on steel to 8 percent from 5 percent and imposing a 5 percent sales tax on cement instead of the current flat fee per tonne, newspapers reported on Wednesday. The daily al-Mal newspaper compared the plan, which is included in the draft 2010/11 budget, to changes in some tax rules implemented in May 2008 that rattled investors. Egypt's financial year runs from July 1 to June 30, and the 2010/11 budget is now with parliament. Finance Minister Youssef Boutros-Ghali has previously said the deficit for that year would be 7.9 percent of gross domestic product. A parliament committee approved a supplementary budget report that included imposing the 5 percent sales tax on the cement price, the state-run daily al-Ahram reported. That would replace a flat fee of 1.40 Egyptian pounds on a tonne of imported cement and a fee of 2.50 pounds on a tonne of local cement, the paper added. In addition, it said the sales tax on steel would rise to 8 percent from 5 percent. Construction has boomed in Egypt despite a global downturn, fuelled by demand to meet housing needs in a country of 78 million and a cash-driven economy largely insulated from international credit markets. Demand for cement rose 25 percent last year and the government has been offering new licences to boost capacity. The draft also makes amendments to taxes on imported cigarettes, but al-Ahram did not give details. The cement industry has been in the frame for new taxes. An official said in April that the health and finance ministries were studying imposing a 10 percent tax on cement companies to raise funds for public health spending. (Source: Reuters)