The budget for the fiscal year, starting on January 1, was passed in parliament with 134 votes out of 217 lawmakers. It forecasts the budget deficit to fall to 4.9 percent of gross domestic product in 2018, from about six percent expected in 2017. Tunisia aims to raise GDP growth to about three percent next year, from 2.3 percent this year.
Tunisia is under pressure from the International Monetary Fund to speed up policy changes and help its economy recover from militant attacks in 2015 that hurt its vital tourism industry.
The country has been praised as the only democratic success among the nations where “Arab Spring” revolts took place in 2011. But successive governments have failed to make the changes needed to trim deficits and create growth.
The 2018 budget raises taxes on cars, alcohol, phone calls, the internet, hotel accommodation and other items. It raises customs taxes on some products imported from abroad, such as cosmetics, and some agricultural products to cut the trade deficit, which widened by 23.5 percent year-on-year in the first 10 months of 2017 to 13.210 billion dinars, a record.
The parliament approved a rise of one percentage point in value-added tax and imposed a new one percent social security tax on employees and companies. State social security funds suffer from a deficit of about $1bn as the economy has been in turmoil since the 2011 uprising against autocrat Zine El-Abidine Ben Ali, according to officials.
Taxes on bank profits will rise to 40 percent, from 35 percent.
In April, the IMF agreed to release a delayed $320 million tranche of a $2.8bn loan package, on condition that Tunisia raise tax revenue, reduce the public wage bill and cut popular energy subsidies.
- BUSINESS REPORT