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Egypt president raises cigarette, alcohol prices

By WTOP Staff

SARAH EL DEEB
Associated Press

CAIRO (AP) — Egypt’s president decreed an increase in sales tax on cigarettes, beer and wine, the latest in a series of price hikes that aim to ease the country’s staggering budget deficit.

The decision announced Sunday increases a flat tax on local and imported cigarettes to between 25 and 40 cents per pack, depending on the brand. It doubles an already existing tax on beer, from 100 percent to 200 percent, and increases the tax on local and imported wines to 150 percent.

Since assuming the presidency last month, former military chief Abdel-Fattah el-Sissi has vowed to take tough decisions to deal with the country’s battered economy, and bring it out of the bottleneck within two years.

Taking on one of the country’s most explosive issues — its massive energy subsidies — his government partially raised fuel prices by up to 80 percent over the weekend. The decision came after the government announced it is gradually raising electricity prices.

Subsidies on basic food stuffs and energy eat up nearly a quarter of the state budget. Despite recommendations by international financial institutions to slash subsidies, no Egyptian leader has managed to broach the issue, fearing unrest in a country where nearly 50 percent of the population live in poverty and rely on government aid.

Speaking to the editors of Egyptian media outlets Sunday, el-Sissi said the decision to lift the subsidies was “50 years late” and described it as part of his efforts to set the country on the “correct” path. His comments were published by the state news agency.

The government has also introduced new property taxes, and plans to introduce a new scheme for value-added taxes. Defending the decision to partially lift fuel subsidies, the government said the move will free nearly $7 billion to be spent on health, education and salaries.

Previous loan talks with the International Monetary Fund since 2011 have centered on subsidy cuts and new taxation, but they faltered in part because governments feared social upheaval.

Early this year, the average minimum wage for public sector workers rose to $171 per month from a meager $50 per month, but it only applies to some 5 million out of Egypt’s 27 million strong labor force. El-Sissi also set a maximum wage for government employees at about $6,000 per month.

During the last three years of turmoil, the state budget deficit hovered at around 12 percent or higher, foreign reserves fell sharply, tourism revenues crashed, while investors shied away because of the turbulent politics. Unemployment increased to over 13 percent.

The decision announced Sunday is clearly aimed at increasing government revenues.

Estimates put the number of smokers in Egypt between 17 to 21 percent of the adult population. The World Health Organization put alcohol consumption in Egypt at around 0.2 liters per person a year in 2006. The industry also caters to the tourism sector.

El-Sissi’s predecessor, the Islamist Mohammed Morsi, tried to raise sales taxes on alcoholic beverages, cigarettes and other luxury goods, but suspended the decision under fire from critics.

El-Sissi came to office on a wave of nationalist fervor after overthrowing Morsi during popular protests against him.

Though steep, the price hikes have so far not caused mass protests or an outpour of discontent.

Most people appeared to be still calculating the cost.

In downtown Cairo, 42-year-old hospital security guard and father of three Mohammed Mohey said he was now paying 75 percent more for his daily public transport fare.

Mohey said he already has a second job to complement his main $171 a month salary.

“I should just give the government my $171 salary so they can deal with it, and feed my daughters and put them to school,” he said, sounding a helpless note.

Critics say the decisions were made in isolation, in the absence of an elected parliament or a detailed budget released to the public.

Mohammed Abu Basha, an economist with Egypt’s largest investment bank EFG-Hermes, said the partial lifting of fuel subsidies will cause a “price shock” to the economy in the short term, increasing the prices of everything, raising inflation and reducing purchasing power. The increase also included increasing the price of fuel for industrial use.

But, he added: “This puts the economy on a more sustainable path.”

___

Associated Press Writer Mariam Rizk contributed to this report from Cairo.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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