Tunisia - Politics, government, and taxation

After gaining independence from France on 25 March 1956, Tunisia became a republic headed by President Habib Bourguiba, who promptly assumed the title, "president for life." Since his ascension to office, Tunisia has been largely a 1-party state. The president's left-wing party, the Socialist Destourien Party (PSD), is dominated political life and punished its opponents with censorship and imprisonment. The 1960s saw a short-lived socialist experiment that finally gave way to increased economic liberalization in the 1970s under the influence of Prime Minister Hedi Nouira. By the middle of the 1980s, the state started to face serious problems as the ailing Bourguiba became increasingly unable to effectively rule the country. Bourguiba's presidency was marked by serious economic instability towards the end of the 1980s, followed by serious civil unrest. A party called the Islamic Movement (MTI), an effective organization with a large base of support, challenged the government's stability. In response to this movement, the president appointed General Zine al-Abidine Ben Ali, a former head of the security services, to be the minister of the interior. His main task was to dismantle the MTI. Following thousands of arrests and the successful dismantling of the MTI, the president appointed Ben Ali the prime minister.

According to the terms of the Tunisian Constitution and based on the opinion of a team of medical doctors who declared Bourguiba unfit to govern, Prime Minister Zine El Abidine Ben Ali assumed the duties of president on 7 November 1987. Ben Ali started to dismantle the old oppressive regime by allowing increased freedom of the press, releasing political prisoners, and legalizing political parties. The PSD party was renamed the Rassemblement Constitutionnel Democratique (RCD) and legislation was passed implementing a multi-party system. Today there are 6 legal opposition parties in Tunisia, but most of them lack the necessary resources to be effective, and they are still prohibited from criticizing government policies. President Ben Ali's government has brought with it economic and political stability, focusing extensively on health care, women's rights, and education. Despite these reforms, Tunisia is still essentially a 1-party state.

The principle source of revenue for the Tunisian government is taxation. According to the EIU Country Profile, more than 50 percent of government revenues come from direct taxation and 40 percent from domestic or foreign borrowing. In 2000, the corporate rate of taxation in Tunisia was set at 35 percent, except for those businesses involved in the fishing, agriculture, or handi-craft industries, which are taxed at a 10 percent rate. Normal business expenditures such as depreciation (the decline in value of a physical asset as it is used over time), social security contributions, and costs are deductible. Due to generous government incentives, exporting businesses are exempt from all major taxes in Tunisia. Personal income tax is paid on a progressive basis ranging from 15 to 35 percent. Non-residents have to pay tax only on income earned from Tunisian sources. There is a 17 percent value-added tax (VAT) on sales that is applicable to most items and transactions.

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