Lebanese Ministry of Information
Lebanon’s private sector made a last-ditch effort Monday to repeal the tax measures designed to finance the salary scale for civil servants, public school teachers and military personnel. Bankers and business leaders, who took part in a broad economic meeting at Baabda’s presidential palace at the invitation of President Michel Aoun, told the participants that any new taxes under the current circumstances would deal a blow to the already struggling economy.
“We told the president and all the participants in the meeting that the private sector is not against the salary scale but the funding should not come from taxes. There are more effective ways to finance the salary scale such as improving tax collection, combatting waste and achieving a higher GDP growth,” Nicolas Chammas, head of the Beirut Traders Association, told The Daily Star.
Chammas argued that a slight improvement in tax collection can generate significant revenues to the Treasury. “Taxes will further contract the economy and we don’t need that. We need to focus on expanding the size of the economy and not burden it with more taxes. The Customs Department saw some improvement in tax collection in few months and we need to build on this,” he added.
Aoun called for the urgent meeting to hear all the conflicting views about the salary scale and tax measures.
Apart from the representatives of the private sector and free enterprises, the meeting was also attended by Prime Minister Saad Hariri, the finance, economy and industry ministers, as well government agencies.
The president is yet to decide on his course of action regarding the taxes and salary increases.
But sources said Aoun is likely to give his seal of approval for both the salary scale and some of the taxes.
The sources added that Aoun may call for amending some of the taxes.
But Finance Minister Ali Hasan Khalil seemed adamant on keeping all the taxes that were passed by the Parliament last month.
Chammas stressed that the funding for the salary scale has already been secured for one year at least.
“The Finance Ministry has around $800 million from the commercial banks. This was the Treasury’s tax share from the financial engineering launched by the Central Bank last year. We need a reprieve for one year before contemplating new taxes,” he added.
Jean Beiruti, the head of the syndicate of seaside resort operators in Lebanon, also raised some reservations on some of the taxes.
“I told the president that raising taxes on plane tickets will be counterproductive. We should instead reduce the prices of tickets to lure passengers instead of hiking taxes on them. I also warned that raising taxes on alcoholic beverages would negatively affect the tourism industry,” Beiruti said. He also commented on recently introduce fines on seaside properties.
“According to the bill introduced by the Finance Ministry, the Treasury will demand $1 billion [collectively] from the owners of properties built on the coast as a lump sum, plus $100 million in fines each year,” Beiruti explained.
Some investors took advantage of the absence of a central authority during the Civil War to build hotels and sea resorts on government properties along the coast.
Beiruti revealed that the 2,365,000 square meters of built-up properties along the coast are legitimate with proper licenses, while 1,500,000 square meters are questionable. “But the government should realize that most of these chalets have been bought by ordinary citizens. Is it fair to punish them with fines?” Beiruti asked.
Adnan Kassar, the president of the Economic Committees who also attended the meeting, urged Aoun to reject the tax bill and return it to the Parliament. He pointed out that “there is a basic need to improve the collection of taxes and fees and to fight tax evasion, which is equivalent to $4.2 billion dollars annually,” adding that taxation is not the most appropriate solution to improve revenues.
Kassar said it is necessary to set a ceiling for public spending and reducing waste in ministries and departments, which is close to $650 million year. He called for reforms in the pension system, including for security personnel, and to end random hiring in government agencies and departments.
