Tunisia PM presses ahead with painful tax reforms and job cuts

Tunisia's Prime Minister Youssef Chahed has pushed through tax raises and job cuts in a bid to cut the country's deficit, despite opposition from unions and business leaders.

MENA

2 min read

The New Arab & agencies

22 November, 2017

Tunisian PM Youssef Chahed is pushing through the changes despite heavy opposition [Getty]

Tunisia is pressing forward with a package of economic policies that will raise taxes and put thousands out of work.

Prime Minister Youssef Chahed is continuing with the changes, despite resistance from labour unions and business associations.

The North African country is under pressure from the International Monetary Fund to speed up policy changes and help its economy recover from militant attacks in 2015 that hurt its vital tourism industry.

Tunisia plans to raise value-added and other taxes and make about 10,000 government workers redundant as part of the 2018 budget to cut its budget deficit.

The government has also proposed a one percent social security tax on employees and companies.

A federation of company owners, UTICA, has rejected that proposal and is threatening to shut down companies.

"We will seek consensus with all, but we go ahead with reforms needed to revive the economy and will not retreat," Chahed told Parliament on Tuesday at the start of the budget debate.

Chahed also wants to freeze public-sector hiring, but the powerful union UGTT said it would not accept that proposal because branches such as education and health needed recruitments.

"Beware the anger of the Tunisian UGTT if the situation continues and if the rest of the parties refuse to share sacrifice," UGTT head Nourredine Taboubi said.

Tunisia has been praised for its democratic progress after a 2011 uprising that toppled President Zine al-Abidine Ben Ali.

But successive governments have failed to make the changes needed to trim deficits and create growth.

Under the 2018 budget, the deficit will fall to 4.9 percent of gross domestic product in 2018, from about six percent expected in 2017. Tunisia hopes to raise GDP to about three percent next year against 2.3 percent this year.