Monday, January 21, 2013

Egypt's New Norm: Befudlement

Egypt's economic and political landscape is an ever-changing one, perhaps now more so than ever. Daily reports of new laws and / or fatwas are announced - to the point where the distinction between what is real and possible and what is merely extremist rhetoric is becoming extremely hard to define. Take for example the announcement made yesterday on how people will be able to procure subsidized bread, posted on the April 6 Democratic Front of the Red Sea's page.

Papers required for the extraction of bread card:

1 - image of the national ID card for the pair
2 - image of the national ID card for wife
3 - electronic images of birth certificates for children
And 3 loaves per capita per day.

[Note: there's no mention of how girls are meant to get bread - but of course it seems the standard now is that girls aren't meant to be out in the street buying bread on their own.]

Aside from the story posted on April 6's site, I have not found anything in English publications about this, but that's not surprising. With the slew of "is this news or not?" coming out of Egypt, it makes an editor's decisions on what to publish and what not to publish very difficult. However I would like to quote a New York Times article from 2008, far before the Revolution, quoting a bread maker in Cairo: "What has not changed in Egypt for 50 years is not going to change now," Muhammad said, though it was unclear if he meant the chaos in front of him or the cheap bread cooking behind him."

I wonder what Muhammed would have to say now. 

Also in recent news are the property taxes that are set to be implemented in 2013. Or they're meant to be right? Well it all depends on where you go, and who you talk to. The property taxes that are scheduled to come into play this year were drafted in 2008, specifically as part of the Property Tax Law. The past few years the taxes have been waived as either A) there was no Parliament in Egypt and this law cannot be ratified until there is, or B) they cannot charge because they need a new law, or C) [insert whatever excuse you fancy here]

If you're like me, you'll spot the first problem immediately here. These tax laws went into effect this week (presumably as part of Egypt trying to show the IMF that they can bring money in from somewhere) yet there is still no Parliament in Egypt. Meaning if the law was previously suspended due to an absence of Parliament, how is it possible to now implement it? 

Second problem, and this comes from first-hand accounts of property owners in the Red Sea. If you go to pay your property tax, you'd better hope the person you're dealing with is having a good day. The current system defines your taxes based on space, be it a studio flat, half villa, villa, etc. However one person may be told they owe 30,000 LE for a flat in one building, while the next person to approach - who lives in the same building and has the same specs on their property - will be told they own nothing. 

A second property owner in Hurghada has not seen the tax man since 2007. At that time, he used to walk around the neighborhood and approach individual properties, collect the tax and move on. This individual owner happened to be out when the tax man came by. The property was immediately marked as an "investment property." Last time they went to pay the tax, it required providing some paperwork and everything was fine. This owner has resided in this property for 6.5 years, yet when they went to pay their property tax they were told they owed 9000 LE, and no record of any previous visits to the property could be found. To reduce the prices, they need to prove that they have resided there for the time they've specified. Yet without simple things like utility bills made out in your name in Egypt, there's really no way to prove that you've been living where you say you've been living for X number of years. 

A third property owner has been paying 350 LE for the past few years. Yet according to the new calculations on how much to pay in property taxes (see below), she should not have been paying more than 54 LE. 

"The tax indicates that a progressive burden will be imposed on properties with a market value of LE500,000 (approximately $83,000) or more, and a annual rent value exceeding LE6,000 (approximately $1,000).
The law stipulates that local committees are to be formed to estimate the rent value of properties. From this figure, 30 per cent will be deducted to cover maintenance expenses, and then LE6,000 or less exempted.
The remaining figure will be taxed at a rate of 10 per cent. The following example illustrates how properties will be taxed."
                                              Annual Rent                                               LE24,000
                                             Less: Maintenance (30%)                            LE 16,800
                                             Less: Exemption Amount (LE6,000)            LE10,800
                                             Tax amount (10%)                                    LE1,080

Are you seeing the dilemma here? This is our daily life in Egypt now. Never is there a clear indication of how things will run, what will come into play next, and how our very favourite comedian Mr. Morsi plans to try and appease the public next. I'm not even going to touch on the possibility that Mr. Mobarak may end up being able to walk free... I'll wait with bated breath (although not really) to see what this Friday brings! 

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