“The state budget for 2014 is an inflationary budget.” This was concluded on Thursday November 21 by Mohsen Hassen, an expert in economy, stating that the middle class would probably face a series of challenges. “This is a strategic mistake in a climate where growth engines are down. A reality that will lead to further economic recession,” he insisted.
Recently approved by the Cabinet meeting, the draft budget whose volume amounted to 28.3 billion dinars is still controversial, while containing a range of new measures. Among these, the increase in the taxation of the middle class, wage freezes and rising prices that will certainly lead to a deterioration in the purchasing power of this class.
The state budget establishes the principle of the absence of tax equity
Indeed, this kind of action comes, he has said, to punish the middle class while enshrining the principle of the absence of tax equity. “These decisions would undoubtedly have a negative impact on the purchasing power of citizens as they will cause an increase in rents and property prices. Something that could obviously affect the purchasing power of citizens,” he said.
In addition to these difficulties, the middle class would face higher prices especially with the current strategy based primarily on the review of the subsidy and the National Fund for Compensation.
With regard to businesses, the economist told Africanmanager on the sidelines of a training session organized around the theme “State Budget 2014,” that the guidelines of the budget in question are not in harmony with the targets for investment in the poorest areas, in particular the encouragement of private initiative.
These remarks contradict with the statements of Slim Besbes, Minister Advisor to the Prime Minister in charge of Economic Issues, arguing that the state budget for 2014 took into account the difficulties of the underclass while maintaining the standard of living of the Tunisian middle class and building a prosperous future for all Tunisians.
More, emphasis has been placed on strengthening social gains by planning a major social housing program, increasing university scholarships and keeping the assistance to needy families.
National borrowing, the best solution to preserve financial stability
This conviction approach does not work in the current situation. It is for this reason that Mohsen Hassen said that in this gloomy situation marked by the economic downturn, the state budget is a weakness that must be addressed. This will be done, in his opinion, only through the launch of a national loan to raise additional resources by the state and to reduce the tax burden on individuals and legal entities.
Among other recommendations, he also refers to the promotion of the domestic financial market, because the state is not currently active on debt issuance in this market. Hence the possibility of emissions of commercial papers on the domestic financial market that would probably boost it by providing additional resources to the state.
Similarly, tax reform remains one of the proposed alternatives. “Today, we can not continue to work with the same flat-rate scheme. It is painful to see our tax system operating with such a system.”
To achieve this, the economist called on the National Constituent Assembly (NCA) to play its full role. “The NCA is expected to revise certain measures in the state budget so that it can respond to a number of priorities such as boosting investment in interior regions as well as fighting against economic marginalization,” said Mohsen Hassen, stating that “the task would probably be easy with the number of solutions available.”
