I car-pooled in to work with my colleague Sarah El-Sirgany yesterday morning. “Let’s hit the gas station, shall we? she said. We were adamant to find out first hand about the hiked fuel prices.
All day Monday the newsroom was abuzz with mostly rumors about whether the new pricing was going to be effective immediately. Sources inside major oil companies told us that the hikes had gone into effect at noon, but were retracted by 4 pm (incidentally while the PA was still debating the issue) under orders from the “authorities. This was confirmed when one of our journalists checked at a gas station in Mohandiseen.
“The prices will go up either tonight or tomorrow morning, the gas station attendant told her.
He was right, and, as we found out, the rises were instituted at 10 pm on Monday night. Instead of paying LE 84 to fill up the 60-liter tank of her 1.6 cc Megane, Sarah paid LE 111 for 92-octane gasoline.
Clearly the decision was signed, sealed and delivered months ago. The government didn’t just suddenly come up with its magic package formula to generate funds to cover pay raises for Egypt’s over 15 million “limited income public sector employees, and pensioners promised by President Mubarak on International Labor Day earlier this month.
And (one should hope) the President didn’t decree the raise on a whim, then ask the relevant cabinet ministers to cough up the cash as some officials and National Democratic Party MPs claimed on several TV interviews.
While the PA vigorously debated the proposal, I was attending a business luncheon and talk jointly hosted by the Confederation of Egyptian European Business Associations and the British Egyptian Business Association.
Minister of Trade and Industry Rachid Mohamed Rachid was supposed to speak about “The Impact of the Current Global Crisis on Egypt, which he did, but then all of a sudden he threw in the bomb shell package.
The measures, he said, aimed to finance the 30 percent increase in civil employees’ salaries, an increase in pensions and additional subsidies on food and energy products.
According to a Beltone Financial report, these include: i) an increase in the prices of 90, 92 and 95-octane gasoline, diesel (gas oil) and kerosene by 35 percent, 32 percent, 57 percent, 47 percent and 47 percent to LE 1.75, LE 1.85, LE 2.75, LE 1.1 and LE 1.1 per liter respectively; ii) an increase in sales tax on local and imported cigarettes ranging between 10 percent and 33 percent; iii) an increase in the price of natural gas for energy-intensive industries, from LE 0.36/ cubic meter to LE 0.57/cubic meter, equivalent, approximately, to a rise from $1.8/mBTU to $2.8/mBTU; iv) imposing a development tax of LE 35/tonne on clay from quarries; v) progressively increasing registration fees on vehicles; vi) removal of tax exemption for private schools and universities; vii) removal of the free zone status from energy-intensive companies operating in free zone areas; and viii) removal of tax exemption on Treasury bills.
The measures are expected to generate LE 14.4 billion annually for the government.
As I found out later on, I wasn’t the only one to be taken by surprise.
Opposition and independent MPs claimed in a TV report that they were never previously informed about these proposals.
One MP said that they were given the 64-page document detailing the new measures one hour before the start of Monday’s PA session as an additional item on the day’s agenda, in violation of the PA by-laws. He said that the NDP MPs had convened privately the day before in what he called a “parallel parliament and signed off on the measures which were rushed through, whether the others liked it or not.
It reminded me of the March 2007 constitutional amendments which were a forgone conclusion. Those who objected were free to slug it out in the opinion pages of Egypt’s free press.
(So much for transparency, democracy and the rule of law.)I’m not a conspiracy theorist, but Monday’s mock PA “debate and the ensuing measures “approved by the assembly surpassed even the most far-fetched scenarios anyone could have imagined the government would adopt at a time when open, and sometimes violent shows of public discontent over rising prices, have been increasing at a frightening rate.
Therefore I implore officials to stop aggravating the situation and stop insulting our intelligence. To claim that this magic package will alleviate poverty without exacerbating the double digit inflation is simply illogical.
The 35-piaster increase in the price of solaar, the fuel used in budget transportation like microbuses as well as in cargo trucks, will lead to a domino effect of price hikes that will naturally render the 30 percent salary raise futile. In effect, government is taking back with one hand what it had given with the other.
I did, however, catch myself cheering the cigarette sales tax rise, the stupendous amounts to be paid in licensing and registration fees for sinfully expensive cars, the end of the tax-free honeymoon for free zone industries that have raked in huge profits from the rise in global oil prices as well as hiking fuel prices used by energy-intensive industries.
For the first time it’s clear that the government is finally doing what it should have done a long time ago: make big businesses and those who own them pay their dues.
The question is will these measures truly alleviate the pinch of soaring prices for the underprivileged? Will they ensure that the money will move from the coffers of the rich to the empty pockets of the poor? And what’s going to happen to the eroding educated middle and upper-middle classes, who once more find themselves in limbo?
It’s not clear if the carpe diem mentality prevalent in the Nazif government has a truly solid vision for the future. Were these measures another expression of its seize-the-moment, quick-fix approach, or were they a genuine promise of fundamental change that will bring about social justice?
Whatever the case, right now the future looks bleak for the majority, and the aftermath could be more dangerous than we imagine.
The gas station attendant summed it up. “Very soon, I won’t be able to send my children to school, he said. “I can’t even afford to feed them.
Rania Al Malky is the Chief Editor of DAILY NEWS EGYPT.
