One of the things that we heard a lot about before leaving was "everyone asks for money!" Some people's travelogues and forum postings seemed angry and frustrated at this custom, and many felt "screwed" by everyone that they met. A few even said it "ruined their trip".
Get a grip. Yes, baksheesh is expected -- often for the most minimal of services -- and yes, it can make you uncomfortable if you're not used to it. But we're not talking huge amounts of cash, here. Baksheesh is far more than just a "tip" -- it is an integral part of life in Egypt. Don't let it ruin your trip.
Just carry small bills, if you can manage it, and thank people with a smile. When we went to Egypt, the Egyptian pound was worth somewhere around eighteen cents US. Giving someone a pound -- or a 25 piastre note, worth about a nickel -- isn't going to make or break your trip.
We never really encountered people who simply asked for money -- some people had stories of being constantly pressed for money by beggars. Other than being mobbed by children when they discovered that Mark carried gum (and starting a fight when he simply handled the box to the largest kid!), we were never harassed. Asked, yes, but politely and without any rancor. Most of the time, the request for baksheesh was low-key, and for actually doing something for us like opening a tomb, holding a tin-foiled board to get light inside, ensuring that the tomb is free of snakes (and delighting in showing me the few they caught!), showing us something particularly interesting, hauling me up or down the bloody sand dunes.
It's harder at the very "touristy" places, where people have become accustomed to having hundreds (if not thousands) of tourists rushing through each day. So, I'm sure there are some scam artists out there -- note particularly the camel drivers tend to be very pushy. The kids selling postcards at the Sphinx can be a daunting gauntlet to pass, but responding rudely or angrily doesn't help. Smile, nod, tell them "No" (la'a) and move on.
The average annual income is about $1500US a year (2001) and the very poor may make far less that $20US a month. People live on what I spend on coffee. It was a rattling thought. Here we were, traveling around the country on a vacation that cost more than ten times what an average worker makes in a year
That said, don't hand out money like you're the Prince of Persia, either. Be generous or not, as you like, but don't expect that money is going to get you everything. Flashing cash might get you into a closed tomb, but it probably will get you treated with disdain, that you think that just because someone is poor that they can be "bought".
What to Tip
I don't usually carry cash at home, and it was hard to remember to carry a few pounds in my pocket for when I used public restrooms. Most bathrooms in public places have an attendant who holds the toilet paper hostage, doles out paper towels, and cleans up the bathroom. For women, it's usually a young girl and there is a plate or basket on the counter to leave a tip. You don't have to -- but a 25 piastre note is a piddling amount when you realize that this makes up the income for this person. If there is no basket or bowl, hand it to them directly if they have provided a service.
I kept trying to figure out whether offering them a tip up front would ensure that I got more than four squares of toilet paper. It didn't seem to matter, and I carried my own anyway!
So, tip the bathroom attendants when you can, tip the caretakers at tombs (about one pound) if your guide doesn't do it, tip 10% or so at restaurants, and don't worry about it, 50 piastres to a pound for bathroom attendants, and the normal amount at hotels for porters and housekeeping.
My only problem with requests for money was from the tourist police. I had a hard time with a government official, no matter how badly paid or remotely stationed, asking for tips. It's common for the tour companies to tip the tourist police for their services, especially when they have to go out of their way to follow crazy tourists buses and hang around while we gawk at things. However, I was slightly offended when asked for "American dollars" by many of them as soon as we met.
An exception, though -- don't tip someone if you ask them for directions, even if they insist on changing directions and walking you halfway to your destination. It is considered rude to offer money for such a simple request.