Egyptians Concerned After Parliament Votes to Increase Fuel Costs, Taxes

By Aya Batrawy

Cairo

07 May 2008

The Egyptian parliament voted Monday to increase the cost of fuel by up to 46 percent. While the government says the move is meant to help generate money for salary increases in the public sector, many Egyptians are concerned they will be left struggling to buy basic goods. Aya Batrawy has more from VOA's Middle East bureau in Cairo.



On Tuesday Egyptians woke up to find that gasoline and diesel prices had increased by about 46 percent overnight. Egyptians were paying about 18 cents per liter but now pay around 33 cents for 90 octane petrol. The Egyptian parliament voted for the increase Monday night with only 65 percent of legislators endorsing the measure.

The government said its decision to lower subsidies on gasoline was meant to help generate some $3.6 billion needed for salary raises. In addition to the hike in gas prices, the government also increased taxes on cigarettes and removed tax breaks from private education and heavy industry.

At a gas station in Giza, a woman named Rasha, driving a late model Toyota, said she normally fills her car with the high-end 92 octane gasoline but now will have to switch to mid-grade because of the cost.

Rasha said the government is talking about raising salaries but it's clear so far it has only raised prices. Although she said she won't be too affected by the price increase,

Rasha said it's the poorest people - those who really cannot find enough to eat - that will feel the price hike the most.



Driving an old model Peugeot, Hossam says he has been working as a taxi driver for 12 years. Although he graduated from college and works an office job in the morning, he works as a taxi driver in the afternoon to earn enough to feed his two children. Hossam is worried that people will refuse to pay more for cab rides and that he will be left paying the difference in cost.

"There will be a problem between me and my customers," he said. "Now that the cost of gas is more expensive, who is going to end up paying for this?"

Hossam said he is just trying to earn enough so that his son and daughter have an ordinary life where they can live well.

The spike in cigarette prices is also set to affect many Egyptians, where people are heavy smokers. A young construction worker buying the domestically-made Cleopatra cigarettes said he has no choice but to pay the difference for the cigarette cost.



He said smoking is one of the few ways he can relax. He was at a corner shop buying five packs of Cleopatra cigarettes at about 75 piasters extra a box, or about 14 cents more per pack.

"How can I quit smoking. People who smoke can't just give it up," he said, "What are we supposed to do but pay the difference?"

The worldwide rise in food prices has also hit Egypt. People violently demonstrated against the rising cost of food north of Cairo in early April where three people died. In recent months, 11 people died in clashes waiting in line to buy subsidized bread.

Out of a population of nearly 80 million, nearly 20 percent of Egyptians live below the poverty line of two dollars a day, according to the UN. It is for this reason that thegovernment subsidizes basic goods such as food and gasoline. There are fears, though, that the recent hike in prices will only fuel inflation.