Parliament shelves public wage hike, approves new taxes

Parliament raised taxes on imported spirits, wines and beer to a minimum of 25% of the product price and introduced an additional LL250 on the prices of cigarette and tobacco packs in addition to LL500 on cigar boxes.

16 March 2017 | 20:22

Source: Annahar

  • Source: Annahar
  • Last update: 16 March 2017 | 20:22

 BEIRUT: Lebanon's parliament approved Thursday a new batch of tax measures but failed to enact a public wage hike that the sweeping majority of lawmakers had claimed was the reason behind the need to introduce new taxes in the first place.

Deputy Parliament speaker Farid Makari, who chaired the general assembly meeting, blamed the failure to ratify the wage hike on the Kataeb party. Makari accused Kataeb party leader, MP Sami Gemayel, of derailing the legislative session by inciting public opposition to the introduction of new taxes that major political parties dub "necessary" to fund an estimated $800 million increase in public salaries.

Gemayel has staunchly opposed an increase in taxes that hit low and middle-income households, calling on the government to instead fight corruption.

On Thursday, Parliament approved an increase in taxes on imported spirits, wines and beer to a minimum of 25 percent of the product price and introduced an additional LL250 on the prices of cigarette and tobacco packs in addition to LL500 on cigar boxes.

The taxes, which target the hospitality sector, drew harsh criticism from businesses that are suffering from an economic slowdown and a decline in tourism spending since 2011.

Lawmakers had on Wednesday also approved a raise in the value-added tax from 10 percent to 11 percent and introduced a L.L. 6,000 tax on the production of each ton of cement. The taxes will become effective once the bill is officially ratified into law.

Public and political reaction was immediate to the new taxes, including a quickly forming street protest.
A spectrum of demonstrators flocked to Riad al-Solh Square waving flags calling to "Challenge Injustice," along with many Lebanese flags hosted among the hundreds of gathering protesters.

Groups represented included the League of Technical School Teachers, civil-society group, We Want Accountability, and supporters of the National Liberal Party and the Kataeb Party.

Negative reaction also flooded social media.

On twitter, Saifedean Ammous posted "Now that we have a government here in Lebanon, 1st thing they do is raise taxes to raise government employee salaries."

Jameel Karaki twitted, "Only in Lebanon, you get no services for your Taxes, u pay taxes for a demolished house!"

Corinne BA, posted, "How do you explain the absence of Taxes on luxury items like yachts, cigars..."

Jad Chaban, the AUB economist, posted, "Raising VAT in Lebanon could generate at least 150,000 new poor persons, according to simulations done years ago."

Blogger Marina Chamma posted to Facebook, "Lebanon's parliament agreed on 17 taxes. Few of them should be welcomed, including the ones on illegal sea property, corporate tax and capital gains tax."

She added, "The rest is despicable: there are no increases in direct taxes, no increase on taxes on banks, no plans to fight corruption, no plans to fight tax evasion, no plans to improve tax collection, no plans to impose a tobacco tax, just to name the most obvious."

Nassib Ghobril,  Byblos Bank chief economist, said in an email to Annahar, "This is an absolute disgrace. Social justice dictates that you go fight tax evasion first before imposing new taxes or raising existing ones," adding, "Only 25 percent of Lebanese individuals and companies pay all their taxes and tax evasion is rampant in the country."

He noted, "In addition, these taxes will increase the cost of doing business in Lebanon, which is already elevated. They will also drive inflation upwards, which will reduce the purchasing  power of all citizens indiscriminately.'

'It is simply inaccurate that these taxes will not affect the lower-income segments of society. They will have a negative impact on everyone," the bank economist said.  "Further they will discourage investment and consumption, which will slowdown economic activity, which is already slow as we have not seen any rebound yet following the political deal to elect a president and form a cabinet in the fourth quarter of last year," he added.  


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