Interview: Moncef Boussannouga Zammouri
In what ways is an effective taxation regime essential for the stability of the country?
MONCEF BOUSSANNOUGA ZAMMOURI: Taxation is an effective revenue redistribution tool that provides compensation for inequalities resulting from the revenue distribution market mechanisms of a liberal economic system. Prior to January 2011 Tunisia achieved a respectable average GDP growth rate of 4.5%, with a sound internal and external financial balance. However, the previous political regime neglected the equitable distribution of income between individuals and between the country’s regions. Increasing inequality among citizens led to the regime’s eventual downfall.
A transparent and efficient taxation system is the driving force of short- and medium-term economic recovery that leads to a more stable democracy. On one hand, it provides the government with the necessary resources to finance mandatory social programmes. On the other hand, it allows the state to bridge the gap of living conditions between different social strata by providing direct social transfers through aid and indirect grants via price subsidies. Taxation therefore ensures inclusive economic growth.
What are the consequences of increased taxation on the economy’s competitiveness?
BOUSSANNOUGA ZAMMOURI: Analysis from the OECD showed that Tunisia had the highest tax rates in the Africa region in 2017. Tax represents around 30.3% of GDP, including social security. However, the tax burden is not uniformly distributed across various sectors of activity. For example, for companies that are engaged in exports, they have benefitted from tax cuts and equivalent fiscal advantages, paying only 10% corporate tax. For companies in the telecoms and financial services sectors, the rate was 35%, and for other industrial sectors it was 25%.
While the budget law for 2019 seeks to unify the tax rate by lowering it to 13.5% for certain industries, the informal sector will still largely avoid taxation. As such, the formal sector will continue to bear the brunt of the tax burden. It would therefore be preferable to lower the overall level of taxation imposed, while at the same time broadening the fiscal base, thereby covering all citizens. Indeed, a high tax burden reduces the purchasing power and profits of companies, causing considerable harm to both investment rates and prospects for economic growth. This in turn engenders a shortfall in government resources, generating increased levels of public debt.
Which benefits will Tunisia gain from its tax cooperation with the EU and the US?
BOUSSANNOUGA ZAMMOURI: Tunisia has signed fiscal agreements with some 70 countries worldwide, including the EU and the US. It has also made commitments in the fight against money laundering and the financing of terrorism. This has led to a revision of some negative assessments that international organisations had previously given Tunisia. In return for this cooperation, and given its new public-private partnership legislative framework, the country should manage to attract significant foreign direct investment for its various infrastructure projects.
How can the advent of digital tax tools help the government broaden its tax base?
BOUSSANNOUGA ZAMMOURI: General improvement of the tax system will see more fairness and efficiency in tax deductions. Digital tax tools are at the core of the tax administration’s modernisation. The most developed computer applications in tax and Customs were created decades ago, first by the National Computer Centre, followed by the Computer Centre of the Ministry of Finance. Several efforts have been made to introduce online declarations and payment; however, these platforms need interconnectivity improvements with existing databases to reach their full potential.
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