NEW PROBLEMS IN EGYPT

Southland Times, Issue 23648, 25 October 1938, Page 14

NEW PROBLEMS IN EGYPT

EXTRA TAXATION CAUSES STIR BARRACKS IN CANAL ZONE The usual summer somnolence has been disturbed this year by two important political questions: First, the negotiations in London by Mohamed Mahmoud Pasha, the Prime Minister, regarding the cost of the barracks to be constructed for British troops in the Suez Canal zone, and, second, the imposition of new taxation to meet the increased cost of national defence, writes the Cairo correspondent of The Manchester Guardian. Supporters-''of the Government now claim that the first question has been settled as a result of the agreemp-.t initialled in London whereby Britain and Egypt will share the cost of the barracks equally. Some such agreement is in the best interests of bom countries. It is no secret that the British military authorities only consented with reluctance during the Anglo-Egyptian Treaty negotiations ot 1936 to the transfer of all British military and R.A.F. forces to a delimited zone on the banks of the Suez Canal provided suitable barracks and aerodromes were built. Early this year rumours became current that the barracks, according to the British specifications, might cost anything up to £16,000,000. Then Ahmed Hussein, leader of the Young Egypt party (formerly the outlawed Greenshirts), who was generally suspected ot “flying a kite” for the Government, came out with the proposal that instead of spending this huge sum on barracks British troops should remain in their present quarters in Cairo, Alexandria, and the canal zone and the money be devoted to the development of the Egyptian Army. COST WAS TOO HIGH If this was done, he argued, Egypt would soon have a modern army ca P“ able of defending the country alone, and British troops could leave the country altogether before the anticipated twenty years. This kite gave the Government an excellent indication of the way the wind was blowing. All political parties were agreed that whether the estimates were £E12,000,000 or £E16,000,000, it was too much for the Egyptian Treasury to bear, since it would leave nothing for developing the Egyptian Army or social reforms of which the country was badly in need. Consequently, as a result of Mohamed Mahmoud Pasha’s visit to London, a new arrangement is said to have been made under which both parties will share the cost of the barracks (now thought to be about £12,000,000) equally. n. * c The second summer problem, that or new taxation, is possibly more important than the barracks. Following the abolitions of the Capitulations last year, foreigners and Egyptians alike are subject to taxation. Therefore, to meet the increased cost of national defence, the Government proposes to introduce a stamp tax (on cheques, documents, and so on), income tax, and inheritance tax (death duties). When the Budget for 1938-39 was introduced in June it was noticed that the Minister of Finance had anticipated receipts of £E1,000,000 for a half-year’s return from this source. Thus, when the Budget came to be debated in the Senate and the end of the session was already in sight, a promise was extracted from the Minister of Finance that if the Bills were not introduced to Parliament in the ordinary way this session he would not bring them into force by decree during the Parliamentary recess. DIFFICULTIES REVEALED No doubt when the Finance Minister gave this undertaking he expected to be able to introduce the Bills before the end of the session. But owing to the political upheaval at the beginning of the year and the General Election in the spring both the Government and Parliament were in arrears, and when August arrived and the Budget debate was not completed' it was clear that difficulties were ahead. Ordinarily Parliament rises at the latest between the middle and end of July so that members may escape the worst heat of the summer. The Finance Minister therefore asked Parliament to give him authority to introduce the taxation measures by decree law. Despite much opposition he received the consent of the Chamber. The Senate, however, was less accommodating and refused by 61 votes to 21. The Finance Minister argued that time was an important factor. If the matter was left to parliamentary debate it might take many months before the taxes could be introduced, and the State was badly in need of the money. Already there was a deficit of £E3,500,000 in the 1938-39 Budget, and even if tilings got no worse there was likely to be a deficit of £E5,000,000 by the end of the financial year. Moreover, he had given an undertaking when the Chamber of Deputies gave permission for the decree law powers, that he would submit the new laws to Parliament for approval immediately the new session opened in November. Then they could make any modifications they thought prudent in the light of experience of the first two months. But senators feared that once introduced changes would be difficult, and members of all parties (except the Saadists, of whom the Minister is president) voted against the Government.