Minister of Finance Amr El-Garhy said that the government will submit bills to the House of Representatives to approve a social package over EGP 43bn.
He told Daily News Egypt that the draft laws include projects to increase pensions, tax exemptions, and allowances, while increasing Takaful and Karama pensions will be approved by the Council of Ministers. The package is set to be implemented from the beginning of the coming fiscal year and will be self-financed through the treasury.
He said that the draft laws are related to procedures that need laws and are not included in the budget, such as tax deduction.
The government approved a financial package today worth EGP 43bn for social security, which includes the increasing of the pension budget by EGP 20bn, the Takaful and Karama pension by EGP 2.25bn, next to EGP 7bn to cover tax deductions and EGP 14bn to cover salary increases.
The Middle East News Agency quoted El-Garhy as saying that two allowances will be implemented, one of them for the public servants covered by the public service law and another for uncovered public servants, where the former will be applicable to receive an ordinary allowance of 7% with a minimum of EGP 65 and a maximum of EGP 130, next to another allowance with the same value.
The law provides the public servants covered by it with an annual allowance of 7% of wage.
Those who are not addressed by the civil service law will receive a regular allowance of 10% of the basic wage and another allowance of 10%, with a minimum of EGP 65 and a maximum of EGP 130 each to amount, collectively, to 20%.
The measures include raising pensions by 15% for 9.5 million people, with a minimum of EGP 130 applicable from the beginning of July. The tax exemption threshold was also lifted from EGP 7,200.
El-Garhy explained that the tax deduction will be applied to three segments; 80%, 40%, and 5%. The first segment up to EGP 7,200 per year will be tax-exempted. The second segment between EGP 7,200 and EGP 30,000 per years will receive a tax deduction of 80%. The next segment with an annual salary of EGP 30,000 – 45,000 will be subject to a tax deduction of 40%. People who receive annual wage of over EGP 45,000 will be subject to a 5% tax deduction.
Mohamed Moeit, the deputy minister of finance for general treasury affairs, said that the package will not impact the target budget deficit in the coming fiscal year.
He told Daily News Egypt that the package will cost EGP 46bn, not EGP 43bn, divided into EGP 23bn for pensions, EGP 14bn for allowances, EGP 2bn for the Takaful and Karama programme, and EGP 7bn of tax deductions.
The government is targeting a budget deficit of 9% of GDP in the coming fiscal year.