Monday,23 July, 2018
Current issue | Issue 1205, (10 - 16 July 2014)
Monday,23 July, 2018
Issue 1205, (10 - 16 July 2014)

Ahram Weekly

Living with austerity

The reduction of energy and electricity subsidies is only part of an overall scheme aiming at limiting the budget deficit to 10 per cent by reducing expenses and increasing tax revenues.

Al-Ahram Weekly

The package includes

• A three-year tax hike of five per cent on annual incomes exceeding LE1 million. This is expected to generate LE2-3 billion in additional revenues.

• Subjecting the revenues of business and professional activities realised abroad by Egyptian individuals and companies based in Egypt to income tax.

• A 10 per cent capital gains tax on annual net realised gains on stocks and investment fund certificates and 10 per cent on cash dividends for short-term investors. The rate will be reduced to five per cent on cash dividends for shareholders who own 25 per cent or more of listed company capital. This is expected to generate LE3-5 billion.

• A 10 per cent real estate tax on the rental value of residential, commercial and industrial units after deducting 30 per cent and 32 per cent for maintenance on residential properties and industrial properties, respectively. It is expected to generate LE3 billion.

• Implementing the new value added tax.

• Introducing a maximum wage ceiling for employees in state-owned entities of LE42,000 per month, or 35 times the  minimum wage set last year. The decision includes banks, telecommunications and petroleum companies.

• An across-the-board increase in car fuel and natural gas, which saw the price of 92 octane petrol increasing by 40 per cent to LE2.60, and the widely used 80 octane variety jumping by 78 per cent to reach LE1.60. Natural gas for vehicles will rise by 175 per cent to LE1.10 per cubic metre.

• A 30-75 per cent reduction in subsidies of natural gas to several industries. This will increase the price of natural gas to $8 per one million thermal units for the cement factories and to $7 for the iron, steel, aluminium, copper, ceramic and glass industries.

• An increase in electricity prices on all seven consumption brackets, with rates ranging between 10 and 50 per cent. A spokesperson for the ministry of electricity said that before the new price hikes the electricity subsidy had reached LE38.7 billion and after the new tariffs it would shrink to LE27.4 billion, slashing the subsidy bill.

• An 120 per cent increase on taxes on cigarettes and doubling those on alcohol.

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