| 15 July, 2017

Lebanon minister upbeat on salary scale approval next week

Finance Minister Ali Hasan Khalil sounded optimistic that Parliament would finally pass a long-awaited salary hike bill for the public sector next week, despite political and financial hurdles

Lebanese traders monitor stocks at Bank Audi head office's dealing room in Beirut,

Lebanese traders monitor stocks at Bank Audi head office's dealing room in Beirut,

REUTERS/Jamal Saidi

15 July 2017

BEIRUT: Finance Minister Ali Hasan Khalil sounded optimistic Friday that Parliament would finally pass a long-awaited salary hike bill for the public sector next week, despite political and financial hurdles, as well as mounting opposition from banks and business leaders to proposed taxes to foot the bill.

Meanwhile, Prime Minister Saad Hariri met with Speaker Nabih Berri Friday night apparently to coordinate efforts and ensure a smooth legislative session next week devoted to discussing and approving a raft of draft laws, including the public sector’s salary hike bill, which has been listed as the first item on the agenda.

During the meeting, held at Berri’s Ain al-Tineh residence and attended by Khalil, “talks focused on the legislative session scheduled next Tuesday and Wednesday and draft proposals listed on the agenda, particularly the salary scale bill, in addition to several issues and files under discussion,” a statement released by the speaker’s media office said.

Earlier in the day, Khalil, speaking to reporters after attending a meeting at the Finance Ministry that brought together representatives of the key parliamentary blocs – the Free Patriotic Movement, the Future Movement, the Amal Movement, Hezbollah, the Lebanese Forces and the Progressive Socialist Party, said: “I am optimistic and I think that we are heading for the approval of the salary scale bill at the next Parliament session Tuesday. All signs indicate this.”

“It is clear that there is a will on the part of all representatives of blocs to approve the salary scale. It is also normal for some parties to have some reservations or remarks,” Khalil said, clearly referring to opposition by some lawmakers to the proposed taxes to fund the salary increases.

He added that representatives of the blocs would meet again Monday to pursue discussions “so that we can go to Tuesday’s session with the highest degree of unanimity on the figures of the salary scale and other details related to it, including the necessary reform measures that must also be approved and the revenues linked to this scale.”The meeting was devoted to discussing all articles related to the salary scale bill and sought to agree on revenues to finance the salary increases for civil servants, including the military and public school teachers, estimated by Khalil at LL1.2 trillion ($800 million) annually.

Khalil, a top political aide to Berri, acknowledged that the cost of the salary scale bill would swell beyond $800 million if the demands of retired employees were to be met.

Speaking to reporters after the meeting, Telecommunications Minister Jamal Jarrah, representing the Future Movement, denied that his party and the FPM were seeking to derail the salary scale bill. “We, the Future Movement, and the FPM support the approval of the salary scale bill,” he said.

In addition to Khalil and Jarrah, the meeting was also attended by MP Ibrahim Kanaan from the FPM, MP Ali Fayyad from Hezbollah, MP George Adwan from the LF, and MP Akram Chehayeb from the PSP.

Friday’s meeting came a day after Berri called on Parliament to meet in a general two-day legislative session Tuesday and Wednesday to study and ratify some 30 draft laws and proposals, with the salary hike bill topping the agenda.

However, the planned legislative session comes amid fears that lingering rifts among lawmakers over proposed taxes to finance the salary increases might delay or even scuttle the bill as had happened in previous sessions.

Khalil denied that the proposed taxes would affect poor or low-income people. “Tuesday will be decisive for the approval of the salary scale [bill] which will not affect poor citizens,” he said.

Khalil has proposed a series of taxes in the draft budget. These include raising the value added tax from 10 to 11 percent, increasing taxes on the interest of bank deposits from 5 to 7 percent, increasing taxes on companies’ profits from 15 to 17 percent, putting a 15 percent tax on profits from real estate transactions and implementing a 4 percent fee on the importation of kerosene.

The proposed taxes triggered street protests by labor unions and civil society groups in March, while a split among lawmakers over financing the salary scale bill thwarted a Parliament session, putting the bill into jeopardy. The tax proposals have sparked wide condemnation from MPs, banks, private businesses, economists and labor unions.

Business leaders have warned that the proposed taxes would deal a blow to the already struggling economy, burdened by more than $74 billion in public debt and endemic budget deficits. The private sector has also warned against any hasty decisions in raising the salaries of civil servants as it could encourage the staff in private companies to demand higher wages.

Khalil said the blocs’ representatives also discussed the 2017 draft state budget, noting that there was no direct link between the salary scale bill and the draft budget.

“The participants stressed their keenness on the approval of the state budget as soon as possible,” he said, adding that the parliamentary Finance and Budget Committee would wrap up its deliberations of the budget’s provisions next week, paving the way for Berri to call for open parliamentary sessions to debate and ratify the draft budget.

Khalil said the meeting also broached proposals to end the rift over demands by some blocs for the auditing of $11 billion in extrabudgetary spending by former Prime Minister Fouad Siniora’s government between 2005 and 2009 as an essential move before Parliament can ratify the 2017 draft budget.

In March, the Cabinet endorsed and referred the 2017 draft budget to Parliament for the first time in 12 years. The salary scale bill was not included in the draft budget, and will be treated as a separate issue before being integrated. The approval of the 2017 draft budget is seen as crucial for controlling state finances and shoring up the battered economy, as Lebanon has not ratified a state budget since 2005, leading to uncontrolled extrabudgetary spending in millions of dollars.

The government has been working on a wage hike for civil servants since 2012, but the bill stalled in Parliament. Civil servants and public and private school teachers have since protested and held sporadic strikes, most recently during the early months of 2017, to press for government action on the bill.

Union leaders have warned of new street protests if the salary increased were not enacted by Parliament in July.

Meanwhile, the Kataeb Party’s youth and student branch called for protests for Tuesday and Wednesday at the entrance of Nijmeh Square leading to the Parliament building to condemn the proposed taxes.

“Once more, the political authority is trying to pass the taxes draft law which it had failed to approve in March under pressure of the Lebanese people and opposition lawmakers who stood up against the authority to prevent it from starving the Lebanese,” the party said in a statement Friday.

© Copyright The Daily Star 2017.