Summary:

On 16 October 2024, a draft version of the 2025 finance law indicated that the government will raise taxes on higher-income households and financial companies while expanding its reliance on domestic loans, according to Reuters. 

The government’s budget, as proposed, would fall from $25.2 billion to $20.45 billion, with the fiscal deficit still rising to $3.18 billion.  

To counter the deficit, the government proposes increasing taxes on various groups, including: 

• Gradual tax increases for those earning over 30,000 dinars per year 

• An increase from 35% to 40% on those earning more then 50,000 dinars per year 

• An increase from 15% to 25% on businesses with turnover of more then 20 million dinars per year 

• An increase to 40% on banks and insurance companies 

Some critics of the bill commented that the policies outlined in the 2025 finance law could punish the families and entities generating wealth and employment in order to maintain an outsized public workforce. 

Outlook: 

With few indications that President Saied will resume talks with foreign lenders, many of whom have tied further lending commitments to the austerity measures outlined by the International Monetary Fund (IMF), Tunisia will be forced to continue looking to domestic funding to keep the government operating. 

Various analysts and commentators have warned that continued reliance on domestic financing to float the national budget will put Tunisia in an increasingly vulnerable economic position with the potential for a sweeping crisis only growing. 

Furthermore, increasing taxes on the same institutions from which the government is intent on receiving loans could create deeper strains on the economy that remains hobbled by the massive public wage bill that generates little value in the broader economy.  

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