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Monday, 4 June 2018

Cabinet to announce new EGP 50-60 bn social protection package “within days,” tax breaks for low income earners in the offing

The Ismail Cabinet is reportedly days away from announcing a new EGP 50-60 bn social protection package, government sources said yesterday. The package, which is meant to help offset the impact on low income earners of an expected hike in fuel and energy prices at the start of the new fiscal year in July, will include pension and salary increases as well as cash assistance programs, other sources tell Al Masry Al Youm. Finance Minister Amr El Garhy is putting the final touches on the new program now, AMAY adds.

Background: We had heard chatter earlier this month that the government was preparing to unveil a EGP 15 bn social protection package in July, which would include an increase in monthly subsidy card allowances (which has since been denied) and an exceptional wage raise for all state employees. The government rolled out an extensive EGP 85 bn protection package last year before hiking fuel prices by 55%, which included annual and hardship raises of 7% for state bureaucrats.

On that note, the House of Representatives’ Manpower Committee signed off on a 15% pension raise for state employees yesterday, Al Masry Al Youm reports. The committee approved a proposal to award state bureaucrats an exceptional 15% raise (or a minimum EGP 750) on their pensions at the start of the new fiscal year during its first meeting on the bill, which would come into effect as of 1 July, according to Al Mal. In addition to their annual raises, the proposal would award state employees not covered by the Civil Service Act an “exceptional” hardship raise of 10% over their base salaries (or a minimum of EGP 65). It would also award all state employees (whether or not covered by the act) another special raise ranging from EGP 140-160 a month, based on their pay grades.

This comes as we hear that the government intends to raise the threshold for income tax exemptions in FY2018-19, Finance Minister Amr El Garhy said yesterday, Al Shorouk reports. The newspaper suggests that the first EGP 8k per year in salary will be exempt from taxes, while employees earning under EGP 200k a year will receive tax breaks within the 5-80% range. Salary amounts between EGP 30,001-45,000 a year, will get a 45% break, up from 40% currently, while sums in the EGP 45,001-200k will get a 7.5% break, up from 5%, according to the minister.

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