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Reports of VAT-hike plans drive up prices 3.5 percent

14 April 2010

BEIRUT: Zouhair Berro, head of the Lebanese Consumers Association, said Tuesday that unconfirmed reports of the Finance Ministry intending to raise the Value Added Tax (VAT) have already resulted in an increase in consumer prices by 3.5 percent in the first quarter of 2010.

“If the VAT increases by 5 percent in Lebanon, it is expected that consumer prices will in turn rise by 10 to 15 percent,” Berro told The Daily Star.

Berro’s remarks came during a news conference held at the headquarters of the consumers association in Beirut in the aim of giving an update to consumers about the latest movements in prices of fruits, vegetables and other items.

“The price indicator shows once again an increase in the prices of 144 basic items consumed by Lebanese people on a daily basis,” he said.

Berro noted that prices have increased in Lebanon but remained stable all over the world with fuel prices recording a slight decrease worldwide.

According to the report prepared by the consumers association, prices of vegetables, fruits, canned products and oil in addition to meat witnessed a marked increase of 9.4 percent, 26.9 percent, 1.3 percent and 0.7 percent respectively. It also said fuel prices rose by 3.6 percent.

On the other hand, the same report showed a decrease in the prices of dairy products by 1.74 percent, household and personal products by 1.17 percent and telecoms items by 0.47 percent.

Ibrahim Harb, a everyday shopper of household products and food items, said that the items that have mostly increased in prices are fruits and vegetables. He said he used to buy 1 kilogram of beans for LL2,000 but he is buying it today for LL7,000.

“The price of 1 kilogram of oranges rose to LL2,500 from LL750, while the price of 1 kilogram of apples rose to LL3,500 from LL1,000,” he said.

Harb went far to explain that he is surprised about the fact that some pastry shops sell cakes at $40 to 60$ each while the ingredients are in fact quite cheap. “You can buy the ingredients at reasonable prices and cook the most delicious cake at home which will cost you much less than buying it from a retail shop,” he said.

Berro blamed the increase of prices on the government which, he said, is always absent and unaware of people’s interests.

“The government aims to preserve the interests of merchants by giving them the freedom to control prices without any intervention from their side,” he said.

Berro said that the reason behind this negligence is the partnership that exists between the political class on the one hand, and the big merchants and owners of exclusive dealerships on the other.

He gave an example of the government’s reluctance in protecting people’s interests by mentioning the ship of spoiled wheat that arrived a couple of weeks ago. “This was also preceded by a ship that arrived to Lebanon 4 months earlier with 25,000 tons of rotten corn; not to forget the illegal and spoiled medical drugs container which tried to make it twice into the Lebanon market without any success,” he said.

Berro, during the conference, asked the political authorities to issue a law for food safety in addition to the establishment of an independent national association with the duty of being responsible for the coordination of the work between the different ministries.

Regarding the hike in prices, he asked the government to review its current taxation policies because the current taxation system places a great burden on the poor and middle class.

© Copyright The Daily Star 2010.