Algerian finance bill adds to citizens’ tax burden

Algerian parliament members struggled to make sense of the move.
Friday 29/05/2020
An Algerian man walks by a greengrocer’s stall in a market of the Khraicia district, 20km south of the capital. (AFP)
An Algerian man walks by a greengrocer’s stall in a market of the Khraicia district, 20km south of the capital. (AFP)

ALGIERS –The Algerian government introduced additional taxes on hard-hit citizens in a new supplementary finance bill, shocking workers and activists who say the measure will add further hardship to vulnerable segments of the population.

Algerian parliament members struggled to make sense of the move, which was criticised as taking priority over government efforts to recover funds allegedly stolen by the former regime of President Abelaziz Bouteflika and kept in European countries.

The tax increase is expected to offset government efforts to help ease Algerians’ economic burden, including by raising the minimum wage to $160.

The measure adds to Algerians’ anger over a fuel price increase that was introduced at a time when the global price of oil was on the decline.

As a result of the measures, unions expect the citizens purchasing power to take a hit as the price of essential goods rises.

Algeria’s financially strained government recently released a report examining socio-economic conditions in the country, detailing some 15,000 marginalised neighbourhoods that host 9 million people, an indication that poverty has dramatically risen.

Outside view of the National Assembly building n Algiers. (AFP)
Outside view of the National Assembly building n Algiers. (AFP)

Parliament’s response to the supplementary finance bill, which will soon be debated by legislators, could have serious repercussions on MPs’ reputations.

Ilyes Saadi, an MP with the National Liberation Front, criticised Finance Minister Abderrahmane Raouya for the new austerity measures.

He stated that the government has not made an effort to come up with new solutions to its financial crisis, instead turning into a “tax collector.” Saadi called on parliament to reject the government’s bill, accusing it of “confusion and failure to run national affairs.”

After the global drop in oil prices, Algeria began work on a financial bill to deal with the expected economic fallout. But analysts accused the government of introducing measures that are likely to increase unemployment and target the working and middle class with new taxes.

In an attempt to curb trade on the parallel market and smuggling operations, the bill also drastically reduced the amount of money allowed to be transferred abroad.

Raouya said the new measures were need to counteract the “global economic recession and the overall health crisis, which is unprecedented and has not excluded any country.”

The minister estimated a budget deficit of more than 10% of GDP, up from a previous estimate of 7%. The country’s expected revenue from oil also dropped from over $30 billion to $20 billion.

Meanwhile, everyday Algerians face uncertain economic prospects. While the government has so far been able to secure salaries for public sector workers, many independent and private sector workers have been let go or unable to find work.

More than 20,000 construction entities declared bankruptcy, adding to the struggles of some half a million workers that have been laid off.

The government has so far been unable to put forward a clear plan for private companies affected by the crisis or help spur job growth.