Do the Poor Pay for the Privileges of the Rich? … A Study on Tax Justice in Egypt

The Egyptian Center has released a new study titled “Do the Poor Pay for the Privileges of the Rich?” as part of its efforts to provide a comprehensive assessment of Egypt’s tax structure and to analyze its effects on social and economic justice, as well as on the financing of essential public services such as healthcare, education, housing, and infrastructure.

The study documents the widening gap in income and wealth distribution and the state’s increasing reliance on alternative financing sources—most notably public borrowing—which imposes additional burdens on the national economy and on citizens, particularly the most vulnerable groups.

Prepared by prominent economist Elhamy El-Merghany and edited by Mahmoud Hashem, the study highlights structural imbalances within the tax system as a key driver of rising social and economic pressures. It shows that low- and middle-income groups shoulder the bulk of the overall tax burden, while higher-income groups contribute relatively little due to extensive tax exemptions and weak progressivity. Official data indicate a decline in the efficiency of the tax system compared to regional and global standards, thereby undermining the state’s ability to employ taxation as an effective instrument for income redistribution and social justice.

The study further explains that the proliferation of tax laws and their frequent amendments—without a unified legislative framework—creates legal uncertainty and places additional burdens on taxpayers, accountants, and tax authorities. This fragmentation also increases tax disputes and undermines voluntary compliance. According to the researchers, the limited incentives for voluntary compliance reduce collection efficiency, weaken transparency, and negatively affect the performance of the system as a whole.

The study underscores the heavy reliance on indirect taxes, such as value-added tax and consumption duties, which disproportionately affect lower-income groups compared to direct taxes on income and wealth. This structure exacerbates socioeconomic inequality and limits the tax system’s redistributive potential.

It further reveals the low contribution of taxes on income, wealth, and capital gains to total tax revenues relative to other Arab countries, amid expanding exemptions and limited progressivity. Consequently, low- and middle-income groups bear a disproportionate share of fiscal burdens, while wealthier groups benefit from minimal obligations—deepening economic disparities and weakening the system’s distributive function.

The study stresses that the absence of tax justice impacts not only economic indicators but also fundamental social rights by restricting citizens’ access to adequate healthcare, education, housing, and infrastructure. The analysis affirms that placing a disproportionate share of public financing on the poor undermines inclusive development, erodes trust in economic policymaking, and increases the vulnerability of already fragile groups, resulting in greater inequality and multidimensional poverty.

The study also notes that weak progressivity and extensive exemptions constrain the state’s ability to achieve sustainable and inclusive development. Lower-income groups bear an unfair share of fiscal burdens, while wealthier groups enjoy clear relative advantages. This dynamic widens the trust gap between the state and citizens and reduces incentives for voluntary tax compliance.

Moreover, the study emphasizes that tax justice is not solely an economic demand but also a constitutional obligation and a social right linked to the economic and social rights enshrined in the Egyptian Constitution and international standards, including the right to a decent life, poverty reduction, and social equality. It argues that the absence of equitable tax burden-sharing limits the state’s ability to meet its social spending commitments and undermines the effectiveness of economic policies designed to protect vulnerable groups.

The study recommends strengthening progressive taxation on income and wealth to ensure fair contributions from high-income groups, thereby enhancing the tax system’s ability to redistribute income and wealth more effectively, alleviating the burden on low- and middle-income groups, and reducing socioeconomic disparities. It also calls for unifying the legislative framework governing taxation to limit the proliferation of laws, reduce legal complexity, facilitate voluntary compliance, decrease tax disputes, enhance transparency, and reinforce trust in tax institutions.

Additionally, the study stresses the need to improve tax collection efficiency to curb evasion and increase revenues without imposing additional burdens on vulnerable groups. It recommends reassessing tax exemptions and broadening the tax base to ensure wider and more equitable participation across all social groups, thereby achieving a balanced distribution of the fiscal burden. The study also places strong emphasis on enhancing transparency and tax governance to ensure fair enforcement, reduce abuses, and secure compliance—strengthening public trust in state institutions and economic policy.

It links tax reform to broader development strategies to ensure that tax revenues are directed toward improving public services and advancing social justice, thereby contributing to sustainable development and safeguarding fundamental rights.

Ultimately, the study aims to establish a more just and effective tax system that reduces social disparities and enables the state to provide high-quality public services, thus promoting inclusive and sustainable economic and social stability in Egypt. It concludes that tax reform must be part of a comprehensive strategy to promote social and economic justice, protect fundamental rights, and achieve sustainable development for all segments of society—deepening trust between the state and citizens and ensuring fair participation in national development.

To access the full study, click here: