Algeria to impose new taxes to cover budget deficit

The Algerian government is planning to impose new taxes on its citizens and to raise VAT by 2 per cent as part of a draft budget for 2017 in order to cover the deficit resulting from a dramatic decrease in oil prices, Anadolu Agency reported on Friday.

If the draft budget is approved by parliament, Algerians would pay taxes on the sale of old cars, house and shop rents. There will also be price increases on petrol and diesel, as well as taxes on electric sets that consume power. In addition, there will be fees imposed for entering and leaving the country.

Algeria depends on oil income for more than 80 per cent of its budget and it has been facing budgetary hardships since the dramatic drop of oil prices in mid-2014 that have seen prices plummet from $115 to less than $47 per barrel.

The new budget, if approved, would hit middle and low income families the hardest, and will be the harshest budget in the North African country since 1999.

For the first time in 15 years, the Algerian government decided to slash public spending in 2017 and also decided to fix its currency’s exchange rate to $108 per dinar for three years in order to reassure domestic and foreign investors.

The Algerian public budget suffered a $17.7 billion drop by the end of the first half of this year, compared to $11.2 billion in the same period in 2015.