Algeria: New taxes threaten tensions amid oil price slump

AP News
Posted: Nov 17, 2016 9:43 AM

ALGIERS, Algeria (AP) — Algerian teachers and medical workers have threatened strikes for later this month in protest at government budget proposals that include tax hikes and salary freezes to offset a sharp fall in gas revenues.

Some lawmakers, who are debating the 2017 budget proposals further Thursday, have warned that the budget changes will cause public unrest beyond the strikes, which are scheduled for Nov. 27-29.

The government's budget proposals include a rise in sales tax from 15 percent to 17 percent, hikes in gasoline prices and higher taxes on cigarettes, as well as public sector salary freezes.

"The list of new taxes will push people to the streets," Nora Mahiout of the opposition Front of Socialist Forces said during a debate Wednesday in the lower house of Parliament.

Other critics have accused the government and well-connected tycoons of amassing fortunes while ordinary Algerians struggle with inflation.

Legislators from the pro-government RND party, meanwhile, are criticizing the budget as inadequate to solve the gas-dependent country's deep economic problems. Algeria's revenues have shrunk sharply over the past two years as oil prices fell sharply.

"The government doesn't have a viable strategy for solving the crisis. ... it has the tendency to turn to temporary solutions that are not up to the economic crisis that the country is undergoing," said Salah Dakhli, RND lawmaker.

The government, he added, is "waiting for a miracle instead of seeking solutions."

Prime Minister Abdelmalek Sellal appealed "for the understanding of the Algerian people in these difficult times." He said the government chose to raise taxes to keep debt under control, and noted that it is preserving some price subsidies.

Economist Rachid Preur warned that the tax rises are just an "hors d'ouvre" and that the government will have to cut those subsidies eventually, too. "Things will get complicated in the future, and it will be impossible to maintain the subsidy policy."

Algeria, which suffered a decade of violence in the 1990s between Islamic fundamentalists and security forces, has long used price subsidies to maintain social peace, notably as uprisings swept neighboring Arab countries in 2011.