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More taxes to pay?

The General Labor Confederation (GLC) warned that the increase of the value added tax (VAT) rate would increase poverty and send the productive sectors into a tailspin.

 

For some analysts, the VAT increase to 12 or 15 percent, could weigh heavily on the middle and low income Lebanese. Others ask the government to impose taxes on real estate transactions. The international financial institutions share divergent viewpoints on this subject.

 

 

The Institute of International Finance (IIF) report in 2010, mentioned that “the increase of (VAT) and use the additional revenues to increase its investments in infrastructure along with the privatization of Electricite Du Liban (EDL) should reduce the Government transfers to the EDL and lead to the larger primary surplus needed for a decline in the public debt to GDP-ratio to take place.”

 

For the Business Monitor International (BMI), “the growth could be slowed if the Finance Ministry wants to increase VAT from 10 to 12 percent and the tax on interest rate deposits to 7 from 5 percent as previously.

 

In Lebanon, every Lebanese citizen pays three types of taxes including VAT, tax on gasoline and customs duties.

 

For many experts, the payment of all these taxes in the absence of crucial social benefits particularly the elderly social security, has become unacceptable. In their opinion, Lebanon needs a tax reform.

 

The VAT tax law was approved by the Council of Ministers in June 2001. Set at 10 percent, it has been effective since February 2002.

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