Al-Ahram Weekly Online   8 - 14 May 2008
Issue No. 896
Egypt
 
Published in Cairo by AL-AHRAM established in 1875

Surprise tactics

Opposition MPs complain they were given only an hour to review a raft of new legislation that increases, among other things, the cost of fuel and cigarettes, Gamal Essam El-Din reports


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Ezz justifies the increase while opposition MPs object in fury

Which is worse, the films, plays and cartoons by Westerners who fail to understand that depicting Islam, Muslims and the Prophet Mohamed in a denigrating manner deeply offends many devout Muslims, or the determination of Western politicians to fiddle away while Rome burns?

Fitna (Sedition), a recently-released 17- minute film made by the far-right Dutch MP Geert Wilders, is the latest

The People's Assembly overwhelmingly approved a government bill on Monday that will increase tax revenues in an attempt to cover the costs of implementing the 30 per cent increase in public sector salaries promised by President Hosni Mubarak in his May Day speech.

The approval came after six hours of intense debate during which opposition and independent MPs claimed the ruling National Democratic Party (NDP) had acted in violation of Article 72 of the assembly's internal resolutions by preparing the bill in secret and scheduling discussion without advance notice. Ahmed Ezz, the chairman of the assembly's Budget Committee, was the focus of their attacks: by failing to provide MPs with at least 24 hours warning of any measure that would increase taxes or prices he had, charged Muslim Brotherhood MP Ahmed Abu Baraka, infringed People's Assembly protocol.

"Ezz held an urgent meeting on 3 May but it did not include any discussion of price increases," said Abu Baraka.

Ezz argues that the meeting was formally constitutional and that MPs had been invited to suggest ways of increasing government revenues to help meet the costs of higher salaries. Parliamentary Speaker Fathi Sorour went on to explain that under certain conditions the constitution empowers the speaker to invite MPs to an urgent debate and vote on budgetary laws. The controversial bill was approved by 297 in favour and 76 against.

The new legislation originally aimed to increase revenues by LE19.8 billion though after amendments imposed by the assembly's Budget Committee that figure increased to LE24 billion. The measures included in the committee's 64-page report involve lifting tax breaks from energy-intensive heavy industries such as fertilisers and iron and steel plants situated in duty-free zones, raising the price of natural gas supplied to cement and petrochemical plants and reducing income-tax breaks from private schools and universities and from returns on treasury bills. While these three measures, which will generate LE2.3 billion in revenues, are relatively uncontroversial, four other measures provoked fiery debate because they will, charge the opposition, impact across social classes. The cost of petrol is to be increased, with some diesel prices increasing by 35 piastres (47 per cent) per litre; Octane 90 and 92 by 45 piastres (32 per cent) per litre and Octane 95 by LE1 (75 per cent). Licence fees will also be increased on vehicles with high-capacity engines.

The Budget Committee report pointed out that spiralling international prices of petrol products had forced the government to increase budgetary allocations for fuel subsidies from LE19.7 billion to LE23.7 billion in the 2007/2008 budget. "The new fuel prices," said the report, "and the increased cost of natural gas sales at home will generate an estimated LE7.5 billion in revenues."

Cigarettes, too, will cost more, with local brands facing a 10 per cent tax hike and some imported brands a 33 per cent increase. The measure, said the report, is expected to raise LE1.3 billion. A "development fee" will also be imposed on the raw materials mined from quarries and used in industries such as cement manufacturing. This will raise an estimated LE1 billion in additional revenues.

In justifying the above package of measures, the Budget Committee report confirmed that in the wake of dramatic rises in the prices of food products and commodities on world markets, President Hosni Mubarak had asked the government to raise the salaries of public sector employees by 30 per cent, increase bonuses payable to local administration employees and double the number of families entitled to subsidised food products accessed through ration cards from five to 10 million.

Addressing opposition attacks, Prime Minister Ahmed Nazif told the assembly that the government had ensured that the additional costs necessitated by the increase in salaries would be met by real income and not by simply increasing the money supply which would automatically feed inflation.

"My government does not favour the politics of economic shocks," said Nazif, who stressed that "the burden of the new price increases will be mainly borne by the wealthy." In Nazif's own words, "the government is taking from owners of expensive cars to give to local administration employees and from heavy smokers to people receiving food on ration cards."

Nazif defended the decision to increase fuel prices. "Allowing fuel prices to remain low," he said, "had served only to compound the inefficient and profligate use of fuel at a time world oil prices have been skyrocketing."

Nazif dismissed suggestions that the government should use the proceeds from privatisation sales to cover the 30 per cent wage increase. "Such receipts," he said, "must be used to enhance other assets and not to cover budgetary allocations or government expenses."

Finance Minister Youssef Boutros Ghali said the government was keen that the post-budget price increases do not cause "a new inflationary wave".

"The Finance Ministry has consulted experts from several ministries in order to determine the products that should be raised in price and others should not," Ghali told MPs. Inflation rates increased to 14.4 per cent in the year to March, the highest for three years.

While NDP MPs rallied behind the government, independent MP Mustafa Bakri accused Ezz, chairman of the Budget Committee and the NDP's secretary for organisational affairs, of marshalling NDP MPs so as to stifle debate. Bakri showed the assembly a copy of the card issued by Ezz for each NDP MP ordering him to be available at the assembly for Monday morning's 11pm session. "This is a clear proof that NDP MPs knew about the new bill in good time while opposition and independent MPs were kept in the dark," Bakri argued.

Brotherhood MPs proposed that voting on the bill be postponed since it "had been put up for debate without notice and insufficient time allocated to discussions".

Speaker Sorour put the Brotherhood proposal up for a vote but it was rejected by NDP MPs.

Sorour had earlier announced that the session would open an hour late to give MPs time to read the bill, a remark that provoked the derision of opposition members. Alaa Abdel- Moneim, an independent MP, spoke for many when he complained an hour was hardly sufficient time to study the 64- page report. He was joined by Taher Hozayen, an NDP MP, who surprised the house by arguing that it was unconstitutional to present the report an hour ahead of session.

Ezz's reading of the report was interrupted by howls of protest from opposition and independent MPs forcing Sorour to intervene.

Mahmoud Abaza, leader of the Wafd Party, said it was important to focus on the form as well as the content of the report. "It is clear that the NDP and the government have no respect for opposition and independent MPs," said Abaza. "It is a meaningless exercise for non-NDP MPs to discuss and vote on a bill as long as NDP MPs are ready to rubber stamp it after an hour."

Abaza warned that the bill would trigger social disturbances. "This bill shows that NDP leaders still do not understand that the public is no longer willing to foot the bill through price rises of the government's arbitrary policies."

Hamdeen Sabahi announced it was a black day for Egypt "when the government is doing its best to strip ordinary Egyptians of subsidies when it is willing to offer Israeli citizens subsidised natural gas".

Sabahi warned that, "the violent food riots that swept Egypt on 18 and 19 January, 1977, could be repeated in the aftermath of the new price increases."

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