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Wednesday 22 September 2021
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Ben Hammouda: Our troubles are not over, there is still more to come…

Economist and former finance minister Hakim Ben Hammouda gave AfricanManager an exclusive interview where he mentioned several points including Tunisia’s removal from the European Union’s blacklist of tax havens, which had already announced to us, the state budget, the wage bill and the price increases in January.

Tunisia has just been moved from the black list to the grey list of tax havens, established by the European Union. What will this really change?

First, it is an important decision even if it was expected because the negative consequences of this blacklisting are important. Now, everything is not finished. The decision of the European finance ministers is to move us from the black list, that is to say the non-cooperative countries, to the grey list of cooperative countries.

We must now take seriously the commitments that have been made and implement them within the timeframes that have been set.

What needs to be done to avoid being singled out by the EU, even in the grey list?

The commitments are of a double nature. First, there are those related to increasing the transparency of our tax system and the resolute fight against tax evasion and money laundering.
At this level, I believe that our country has made significant progress that needs to be continued and strengthened and, above all, keep our partners informed.

The second area concerns the tax privileges that were granted by our country to foreign investors, particularly under the Act of April 1972.

However, these privileges were not granted to favor any tax evasion but rather to attract foreign investors who have helped create jobs and diversify our economy and improve its competitiveness.
It is true that today the global trend is to favor a convergence between offshore and inshore activities, which we started to do in our country where the taxation of offshore companies has moved up from 0% to 10% as of 2014.

This tax must therefore evolve. But this decision is of great importance because it must be accompanied by a structural evolution of our economic fabric to specialize in activities with high technological content.

This development is likely to be a problem for labor-intensive activities, especially textile industries, which are already experiencing significant competition from other countries.

The increase in the wage bill is weighing more and more on the state budget to the extent that the Minister of Finance has recently raised the possibility of resorting to compulsory retirement in the public service. Is this the right solution?

The increase in the wage bill weighs heavily on the state budget compared to other items of the state budget, including investment.

The government has formulated two reform projects to deal with this increase: one concerns early retirement and the other is negotiated departure from the public service.
These two projects could reduce the weight of the wage bill in the budget. But their impact will be limited in so far as the savings set by the government seem relatively low.

What do you say about the rise in prices and the ensuing controversy?

2017 was not a good year for inflation. Indeed, we ended the year with relatively high inflation and which was estimated by the INS at 6.4%.
This figure represents a break with previous years when we managed to keep it below the 5% threshold.

It was feared that the measures contained in the 2018 Budget Law would result in an increase in the price index and trigger an inflationary spiral.
These are the concerns and concerns that explain the criticisms and challenges that arose early this year.

 

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