UPDATE 4-Egypt parliament approves higher fuel prices

(Adds Brotherhood reaction, prime minister comments)

By Abdel Sattar Hatita

CAIRO, May 5 (Reuters) - Egypt's parliament approved steep increases in fuel and cigarette prices and vehicle licence fees on Monday to cover the costs of public-sector pay hikes that President Hosni Mubarak proposed last week.

Economists said some measures, such as the increase in fuel prices, would add to high inflation and offset some of the effects of the wage increase.

"The government is giving with the right hand and taking back with the left hand," said Hani al-Husseini, a tax expert and a senior member of the leftist Tagammu opposition party.

A booklet distributed by a parliamentary committee dominated by the ruling National Democratic Party (NDP) said the price of 90 octane gasoline would rise 35 percent to 1.75 Egyptian pounds ($0.33) a litre.

The lower house of parliament approved the measures, proposed earlier in the same day by the ruling party, by a vote of 297 in favour and 76 against, said parliament speaker Fathi Sorour, who had called for an urgent decision on the proposal.

Mubarak, facing growing public dissent over price rises, last week offered public sector employees a 30 percent increase in basic salaries, provided necessary revenue could be found so that the increase did not add to the budget deficit.

Prime Minister Ahmed Nazif told a news conference the price rises would go into effect starting at 1900 GMT, and would generate 12 billion pounds for the budget to pay for expected wage increases and help handle higher global energy costs.