Tunisian President Saied proposes bypassing IMF through increased taxation on the wealthy

President Kais Saied of Tunisia introduced a new proposal on Thursday aimed at levying taxes on the wealthiest individuals in the North African nation. His initiative seeks to steer clear of what he refers to as the “dictatorial mandates” of the International Monetary Fund.

Months after reaching an initial agreement on a nearly $2 billion bailout package last October, discussions with the IMF have hit a roadblock. The impasse stems from the IMF’s insistence on reforms to restructure public entities and phase out subsidies on essential goods.

During a recent meeting with Prime Minister Najla Bouden, Saied stated that the current subsidy system, as per a statement from the presidency, is advantageous for all Tunisians, regardless of their financial status, including the wealthy.

He floated the idea of “taking surplus money from the rich to give to the poor”, citing a quote attributed to Omar Ibn Al-Khattab, one of Islam’s first caliphs.

“Instead of lifting subsidies in the name of rationalisation, it would be possible to introduce additional taxes on those who benefit from them without needing them,” Saied added.

He said he believed such a mechanism would mean the country would not have to bow down to “foreign diktats”.

Saied did not say how such a plan might operate as employees’ taxes are deducted at source and many Tunisians in the private sector do not declare their full income.

The IMF has called for legislation to restructure more than 100 state-owned firms, which hold monopolies over many parts of the economy and in many cases are heavily indebted.

The country is going through a financial crisis marked by chronic shortages of basic food products.

Political tensions are also running high since Saied launched a sweeping power grab in July 2021, instituting autocratic rule in the birthplace of the pro-democracy Arab Spring revolts over 10 years previously.