CAIRO: While government officials see that raising vehicle license fees is a way of achieving social solidarity, car owners see an extra burden on their budget. Opposition figures, meanwhile, see that the newly-passed measure stains several segments of society and overlooks luxury citizens. Car retailers, however, remain unsure about the consequences of the decision on their sales.
Following Monday’s decision to increase vehicle license registration fees among other things, Prime Minister Ahmed Nazif said in a news conference that to cover costs of public-sector pay hikes that President Hosni Mubarak proposed last week, the government fetched resources from affluent social classes such as luxury car owners.
“These measures will not affect low-income citizens, Nazif said.
Finance Minister Youssef Botrous-Ghali told Egyptian television Monday evening the rises in vehicle license fees were apt because the current fees have been in place since the early 1980s.
“For cars with engine capacities lower than 1600 CC, we [the government] took it slow; owners will only pay an annual fee between LE 100-120. Car owners with engine capacities between 1600 CC and 2030 CC, are chic, richer and able to pay more money; therefore they will pay an annual fee of LE 1,000, an amount that will decrease two percent each year to reach a minimum of LE 200, the minister explained.
Previously, license fees for cars in the 1000 CC-1600 CC range were between LE 16-25, and LE 120 for the 1600 CC-2000 CC cars.
For cars with motor capacity greater than 2030 CC, owners will pay an annual fee equivalent to 2 percent of the car’s value – up from LE 500 – that could reach a hefty LE 28,000. Ten percent of the stipulated amount will be cut off each year.
“The rises in license fees [alone] will generate more than LE 1 billion per year for the state budget, Ghali added.
The decision, however, sparked strong controversy, with several opposition leaders saying the Parliament rushed approving the new hikes, which adversely affect lower-income citizens on one the hand and turn a blind eye to upscale citizens on the other hand.
“These measures were hurriedly discussed in Parliament, said opposition MP Alaa Abdel Moneim. “Only one hour before the session, we received a 64-page booklet [distributed by the NDP] that proposed this disaster.
By law, the parliamentary agenda must be announced at least two days before sessions take place.
“Why ignore opposition and other MPs if these decisions truly serve lower-income levels? The main objective was to pass the measures quickly, he added.
Other opposition and independent members of Parliament reiterated the same doubts, which led Speaker of Parliament Fathi Sorour to justify the haste by saying that the issue was of urgent.
Abdel Moneim pointed out that raising car license registration fees does not necessarily achieve social solidarity because it strongly impacts the purchasing power of the low and low-middle income groups and overlooks higher-income citizens.
“What about yacht licensing and private plane licensing? No one discussed these issues, which entails that wealthy classes are not going to be affected by these measures.
However, according to Minister Ghali, these measures balance the scales and will enable poorer segments of society to escape the higher food prices wave, which is driven largely by the international market rather than by local factors.
“The most important factor is to sustain our seven percent growth rate because it will bring in new resources, he said. “I hope that we can sustain this seven percent figure as well as try to curb inflationary pressures, whenever possible.
Hikes in vehicle license fees also weighed down on car owners. “The figures are too high. A person who buys a car is already loaded with installment debts, and the government further strains us with car registration fees as well as gasoline? wondered Mohamed Madkour, an accountant at a public-run company.
“It seems the government wants people to drive old, obsolete cars that break down in the middle of the street or a bridge and block traffic and pollute the environment, stated Yara Mohamed, a bank employee. “Look at Arab countries, they drive 2000 CC engine cars and don’t pay such fees.
If the government wants to support the poor, let it do that from its own resources.
Vehicle retailers, on the other hand, remain uncertain about how the new license registration increases will affect their prospective customers. “The decision is still fresh, and no one can predict its consequences, said Mahmoud Alaa, sales and marketing executive at Ghabbour Auto. He adds that the license increases are not too high compared to gasoline hikes, which he believes will have a more direct effect on sales of 2000 CC engine cars.
According to analysts, the new increases are high in percentage terms, however, the new fee structure is not significant in absolute terms for capacities less than 1600 CC, which represent the bulk of passenger cars in Egypt.
Latest figures suggest that luxury vehicles constitute eight percent of vehicles used in Egypt.
“For capacities of 1600 CC and above, the increases can be seen as more significant. Having said that, we do not see a direct impact on new car sales as a result of both increases in registration fees and increases in fuel prices, as the traditional buying decision in Egypt is based on the fact that other appropriate transportation means are not available, Beltone Financial commented.
General Motors officials were not able for comment at press time, and sources at Mercedes-Benz declined to comment on the issue, saying it was a governmental decision.
