Egypt's proposed capital gains tax is a "disaster" that will scare people away from the country's stock market, billionaire Naguib Sawiris said, adding pressure on the government to reconsider the plan.
"We are totally against it," Mr Sawiris, the founder of Cairo-based mobile-phone operator Orascom Telecom Holding SAE, told Bloomberg Television today. "There are discussions now that they withdraw that."
Finance Minister Samir Radwan on June 1 announced a 10 per cent tax on dividend payments, mergers and acquisitions and asset revaluations as part of a draft budget that aims to rein in a widening budget deficit. Egyptian Exchange Chairman Mohamed Abdel Salam said the plan, which won't affect gains from trading, may harm the North African country's stock market.
A popular uprising that ousted President Hosni Mubarak in February has sent Egypt's benchmark EGX 30 stock index down 24 per cent this year, making it the world's worst performing gauge. The index fell 2.7 per cent on June 2, the day after the tax plan was announced, and rebounded 1.6 per cent yesterday.
"We have explained our point of view to the Ministry of Finance," Mr Sawiris said. "The press has also been really supportive and the head of the Cairo stock exchange was a very brave man and expressed his concern. I think they will retreat."
Egypt's budget deficit may widen to about 10 per cent of gross domestic product in the fiscal year that ends this month, compared with 8.1 per cent in the previous 12 months, Mr Radwan said. The economy of the most populous Arab country may expand 2.6 per cent this fiscal year compared with 5.1 per cent in the year that ended June 2010, according to government forecasts.