EOHR holds a seminar on the law of real estate tax

January 14th, 2010 by Editor

At the end of a seminar entitled” The law of real estate tax… Pros and cons” which was held by EOHR on Wednesday 13/1/2010 at Paramiza hotel, legal and parliamentarian experts and human rights activists confirmed that the law of real estate tax is not constitutional as it violates some articles of the constitution (40,38,34), also it imposes a tax on the reserve capital  not on the returns. They called for exempting the private housing from the real estate tax and declaring their solidarity with the campaign of the Egyptian Organization for Human Rights, which launched in December 2009 in order to convince the legislator to amend the real estate tax to conform with article 11 of the International Covenant on Economic and Social rights and the comments of the United Nations Committee on Economic and Social rights and paragraph I of Article 25 of the Universal Declaration of Human Rights ratified  by the Egyptian government.

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Mr. Ashraf Al Araby,  head of the Egyptian Tax Department confirmed  that there is no suspicion of the non-constitutionality of the new law , noting that the law took into account the interests of low-income citizens , and the law reduces the real estate tax rate from 40% to 10% and considered  the cost capacity of whom pay  taxes  . Al Araby confirmed that the tax should benefit the lowest income in the country and involves the marketing value and redistributes  the value on unfortunate people , he added that the law  is the solution that the government can maintain the real estate wealth in Egypt through improving services to the existing wealth, and to extend the main infrastructure which create a new urban areas, especially that Egypt has a real estate wealth estimated with  an average of about 4 trillion pounds, however the proceeds from the previous law of real estate   reached 400 million pounds which doesn’t cover except the cost of wages of real estate employees after joining them to the ministry of finance. He expressed his surprise on the vast  revolution, which the law faces . He pointed out that 5% of the real estate owners will be subjected to the law while 95% will not.

 Mr. hafez Abu Seada, Secretary General of EOHR confirmed that the imposition of real estate tax violates the spirit of the constitution and its provisions and its main articles which evaluate the tax system on the social justice ( article 38) and protect, encourage and organize savings ( article 39) and also protect the private property (article 34 ) . So the request to cancel  the decision of executive regulation No. 493 -2009 and decision 494 -2009 to issue forms is an issue meets the need of the real status and law as it violates the constitution .Abu Seada said that the law is afflicted with double Taxation as Article 41 of Law No. 91 of 2005 which provided that the tax is applied  to the income derived from the rental of any furnished unit  or part of it , whether for commercial or any other purpose, the revenue submitted to the tax is determined on the base of actual rental value with 50% discounted for the return of all costs and expenses , so the owner of the rental  unit shall pay the tax on the rental value in accordance with the law of tax No. 91 /2005 , also he has to pay another tax according to law No. 196-2008 the matter which  is considered an imposition of more than a tax on one tax base .

 Dr. Sarwat Badawy, professor of constitutional law at Cairo University, confirmed that there are several laws which contradicts with international laws  the matter which threatens the social justice  and this is what happened in the real estate tax law, this law has no advantages and violates all rules . He added that the law contains several constitutional gabs as the tax shall not be imposed on the reserve capital and it broke the principle of equality as the equality in tax system is different from other issues. He expresses his hopes in the supreme constitutional court which issued many of the provisions in the case of tax,  when the land tax was reviewed , responsible officials were alerted to the

Unconstitutionality as the supreme constitutional court issued its decision with the unconstitutionality of the unoccupied land tax after some years, expecting  that the same matter will be done for the law of real estate taxes, and therefore there must be a clear definition of the tax base and to give a clear determination to the rules of calculating the tax , the tax may be imposed on the reserve capital but under two conditions : the first  one is to impose the tax one time only and the second condition is to impose the tax for services presented by the state.

      Dr. Atef Al Banna, Professor of Constitutional Law, Faculty of Law, Cairo University, confirmed that the law of real estate tax has several defects as he pointed out that the tax may not be imposed on the reserve capital as in the case of private housing . Al Bana called for the necessary to exempt the private housing from the real estate tax as it doesn’t generate any income and the imposition of tax will violate the natural rights. He added that the tax shall be imposed on the real income and imposing tax on the reserve capital should be in a specific circumstances.  

 Dr. Mustafa Nasharti,  Deputy of Faculty of Economic  at the University of Egypt for Science and Technology , called for exempting  the private housing from taxes for those who can not pay these taxes, for example, in Germany, there are  20% of the German people benefit from the exemption from taxes on housing.

  Al Nasharti confirmed that there should be  a special section of the Financial system for the state in the Constitution. In the Egyptian Constitution, we find that the State is centralized and there is no financial system , so the constitution has to be amended . As for the law of real estate tax , it allocates the equivalent of 75% of the total revenues to the Treasury of the state , and the remain 25% allocated to the governorates,   and therefore the argument that said that the tax proceeds collected will go to the development of locals  was false, the tax doesn’t provide services to the governorates  and the rest will go to finance the budget deficit in the state, and so the Egyptian economic will be in a continued deterioration .

 Mr. Ahmed Abu Baraka, member of the parliament, clarified that there is a lack of  discussion and social dialogues on laws issued by the legislative  institution in Egypt , the matter which makes these laws full with criticisms and weakening points as he confirmed that the law of real estate tax is the most prominent example : article 3 includes an amendment of tax on the income , and so double taxation will be occurred and so it is unconstitutional , also article 8 which is related to the validity of the tax, it created a form of confusion and injustice in the standard for the stakeholders and it equals the occupied real estate with other unoccupied .

 Mr. Ahmed Seif El Islam, director of Hisham Mubarak Center and  lawyer of cassation , pointed out that  article 13 of the law of real estate tax violates the  international standards for the right to housing,  there are special conditions set by  the International Covenant on economic and social rights as it will help us in dealing with the tax such as providing security and services like water, electricity and sewage, affordability, access to housing, site and adequate housing and therefore the State is obliged to respect its commitments and giving effects to  these rights to protect individuals when exercising their rights stated in the constitution . Seif Al Aslam called for the necessary to review the real estate tax because it is the right of citizen  regardless of his economic level, to access to adequate housing .   

This entry was posted on Thursday, January 14th, 2010 at 1:28 pm and is filed under Statements. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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