{"id":581435,"date":"2023-02-14T00:00:00","date_gmt":"2023-02-14T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/02\/14\/this-morning-now-is-not-the-moment-to-raise-wage-taxes\/"},"modified":"2023-02-14T00:00:00","modified_gmt":"2023-02-14T00:00:00","slug":"this-morning-now-is-not-the-moment-to-raise-wage-taxes","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/02\/14\/this-morning-now-is-not-the-moment-to-raise-wage-taxes\/","title":{"rendered":"THIS MORNING: Now is not the moment to raise wage taxes"},"content":{"rendered":"

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Good morning, friends, and welcome to a reasonably quiet Valentine\u2019s Day <\/span>(at least on the <\/span>news front). <\/span><\/p>\n

Setting the tone this morning: <\/span>Just about all of the newsflow is out of petroleum expo EGYPS <\/span>and the House of Representatives, though we\u2019re very happy indeed to note Flat6Labs having hit first close on its USD 20 mn KSA fund. <\/span><\/p>\n

ALSO- Don\u2019t miss our sit-down with EBRD Egypt boss Khalid Hamza<\/span>, who spoke with us about the EBRD\u2019s very big (and very green) year just ended \u2014 as well as why we can expect one of our most important investors to do even more here this year. The interview appears in this morning\u2019s Going Green, below.<\/span><\/p>\n

<\/span>MORNING RANT- We\u2019re still feeling a bit grumpy about the government\u2019s plan to raise <\/span>wage tax to 27.5% at the top of the bracket. <\/span>The move would apply to the portion of annual gross salaries above EGP 800k a year. We <\/span>broke the news<\/a><\/span> in December and, as of early this month, <\/span>the plan is still moving forward<\/a><\/span>, though we have no clarity on when it might be implemented. <\/span><\/p>\n

This just isn\u2019t the time to talk about tax hikes: <\/span>Inflation is running at a five-year high, with <\/span>urban inflation running at an <\/span>annual rate of nearly 26% in January<\/a><\/span>. And anecdotal evidence suggests <\/span>the real rate is even higher for the nation\u2019s white collar workers<\/span>, whose basket of goods and services skews heavily toward things that are (a) imported or (b) reliant on imported production inputs. That\u2019s not surprising: At the time of the last \u201cbig\u201d devaluation of 2016-2017, we reported, middle and upper-middle class inflation was running at north of 80% for a time. <\/span><\/p>\n

It took two years for wages to catch up<\/span> \u2014 and even then, there\u2019s an argument to be made <\/span>that consumer spending power never fully recovered. (Is it a coincidence that the turbocharged growth of BNPL and other consumer finance solutions followed the last deval?)<\/span><\/p>\n

Businesses are now under pressure from their staff to deliver significant raises <\/span>as people <\/span>cope with the rising cost of everything from groceries and tuition to clothing and car maintenance (and don\u2019t even get us started on the price of new cars \u2014 if you can even find one.)<\/span><\/p>\n

How big will those raises have to be? <\/span>Our 2023 Reader Survey will have the lowdown when <\/span>we release the results next week, but so far:<\/span><\/p>\n