Algeria introduces tax increases with 2017 Finance Law

Algeria has officially adopted the budget set by the 2017 Finance Law that will see taxes raised in a bid to make up for the fall in revenues in the oil sector, officials confirmed yesterday. The budget, which was signed into law by President Abdelaziz Bouteflika, will be based on the oil price of $50 per barrel; oil is Algeria’s main source of income.

Taxes are set to rise on goods such as alcohol and tobacco, as well as petrol-based products and property. The budget cuts and increases will hope to create an income of $51 billion with a spending allowance of $63 billion. They will also allow $14 billion to be spent on welfare, including subsidies on basic products and some within the housing and health care sectors. Ten billion dollars is being allocated to defence of the country in which, like the rest of the region, there are growing fears about instability due to armed Islamists fleeing parts of Libya as well as home grown militants.

In a bid to save the pension system from bankruptcy, the government has proposed an increase in the pension age and allowing pensions to be paid after 32 years’ service. This has been seen as a controversial move.

In 2011, due to high oil revenues, Algeria was forced by public pressure to increase wages and subsidies considerably. However, the 2014 collapse in crude oil prices meant that the government in Algiers had to cancel investments and introduce further cuts to public spending.