Magharebia (Washington DC)

Tunisia: Pressures Mount On Tunisian Middle Class

Tunis — Tunisia's proposed 2014 budget calls for tax hikes and subsidy cuts to cope with a drop in state revenue, sparking widespread controversy.

"The whole current draft budget is facing a lot of problems, including an expected growth rate of about 4 per cent and deficit cut to about 5.7 per cent," economist Mohsen Hassan, an economic expert told Magharebia. "These are unrealistic goals in view of internal and external conditions."

"In terms of procedures, it will lead to the deterioration of purchasing power of the middle class and enterprises," he added. "This contradicts with the national goals of employment and provincial development."

He also wondered why the presidency's budget was raised in the draft legislation.

"The government must give an example in rationalising expenses and in austerity; the presidency's budget was raised, while the employment and education budgets were cut," he said.

Abdelfatah Mourou, a leader of Ennahda, told Magharebia that the government must tell the people the truth and that the next budget would hurt the middle class.

"The government doesn't have a magic wand or alternative solutions," he noted.

Finance Minister Elyes Fakhfakh responded to critics, saying that the next budget wouldn't eliminate the middle class, and that its aim was to support the purchasing power of vulnerable categories, stimulate investment and also cut debt.

"The most important features of the next budget are rationalising expenses in ministries and public institutions, stopping pay raises and cut the hydrocarbon subsidy," the minister told the Constituent Assembly's Fiscal Committee on December 4th.

Habib Hamdi, a leader in the finance minister's Ettakatol party, told Magharebia that the criticism was "just political slogans; whoever criticises this budget can come forward and offer alternatives".

Economic expert Moez Ejjoudi explained to Magharebia that "the new budget law includes raising the registration fee for real estate above 100,000 dinars".

"This will lead to a rise in the price of real estate hence the middle class will find it difficult to buy homes in the future. The new law raises also the tax for car licenses from 50 to 70 dinars based on the car's horsepower while the middle class is already burdened by the circulation tax and high gasoline prices."

The Tunisian General Labour Union has also criticised the proposed bill, saying it did not taken citizens' purchasing power into consideration, adding that the draft budget was put together without consulting with social categories or citizens.

"The draft budget has cut allocations set aside for development," the group said.

Meanwhile, citizens wonder why labour groups are rejecting the budget if it is good as the minister describes it.

"I don't understand why the middle class should be targeted by increased taxes and levies on popular cars," said Soha Toumi, owner of a barber's shop. "We're already suffering with the high prices, and instead of them finding solutions, they're making the crisis worse."

"Taxes have destroyed us and we can no longer afford them," agreed Karim Bin Moussa, a pharmacist. "The profit margin has largely shrunk, let alone the new taxes which will be imposed soon. It's very scary."

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