Tax collection, cuts key to budget goals: Lebanese PM

Prime Minister Saad Hariri said that Lebanon would be able to hit its target for slashing the state’s budget deficit this year by improving tax collection and ending unnecessary government projects.

  
Lebanese Prime Minister Saad al-HarirI is seen during the meeting to discuss a draft policy statement at the governmental palace in Beirut, Lebanon February 6, 2019. Image used for illustrated purpose

Lebanese Prime Minister Saad al-HarirI is seen during the meeting to discuss a draft policy statement at the governmental palace in Beirut, Lebanon February 6, 2019. Image used for illustrated purpose

REUTERS/Aziz Taher

BEIRUT: Prime Minister Saad Hariri said Thursday that Lebanon would be able to hit its target for slashing the state’s budget deficit this year by improving tax collection and ending unnecessary government projects. The premier’s comments followed a Parliament session in which lawmakers agreed on the need to avoid endorsing any legislation that would constitute an additional burden on the country’s crippled finances. Only a handful of the 22 laws on the day’s agenda were ratified in a session that lasted just over three hours.

“We will have to save some money by stopping some projects that are unnecessary, and at the same time, we need to make sure that we collect more from taxes,” Hariri told The Daily Star outside Parliament after the session ended.

Hariri said improved tax collection alone would be enough to reduce the deficit-to-GDP ratio by 1 percentage point in a year, in line with commitments made in his Cabinet’s policy statement. The reduction aims to unlock some $11 billion in grants and soft loans pledged at the CEDRE conference last year for a host of infrastructure projects.

The state’s income from taxes should be between 23 and 25 percent of Lebanon’s GDP, but is currently significantly less than 20 percent, he said. “If we just increase to 20 [percent], we will close this gap of 1 percent and more.”

Despite the premier’s optimism, Finance Minister Ali Hasan Khalil said a day ago that he was “uncomfortable” with Lebanon’s draft state budget, and that current projections showed Lebanon was in fact headed for an increase of its deficit-to-GDP ratio, by about 0.5 percent, due to increasing expenditures and decreasing revenues. Nevertheless, Hariri said, “I’m confident that where there is a will, there is way.”

He added that “hard decisions” were necessary to reduce the deficit, but played down concerns that ordinary Lebanese citizens would bear the brunt of changes.

“If you see what we passed today ... any laws that had any financial effect were disregarded. So no laws passed that will put more pressure on our public finances,” he said.

This was true, with the exception of the passage of a salary raise for a group of public school teachers. MP Mohammad Hajjar, a member of the Education and Culture Committee, told The Daily Star the group was made up of 2,150 teachers.

After the endorsement of a public sector salary increase in 2017, debate arose as to whether these teachers deserved the raise. They had technically only been working part time when the new salary scale was ratified, but were essentially working full time when various extracurricular duties, such as trainings, were taken into account.

In a Cabinet session last week, ministers approved the raise, with the opposition of ministers affiliated with the Lebanese Forces, the Marada Movement and the Free Patriotic Movement - except for Defense Minister Elias Bou Saab.

FPM leader Gebran Bassil again opposed the provision’s endorsement at Parliament Thursday, saying the state had to make a choice on whether it wanted to reduce public sector spending.

But Hezbollah MPs made the case that it was a “right” for the teachers. Hezbollah-affiliated Youth and Sports Minister Mohammad Fneish told Bassil, “I agree with you on the principle [of reducing state spending], but not here.”

Parliament also ratified long-awaited amendments to the 1942 overland trade law, which had been knocking around committees for 14 years. MP Rola Tabsh said after the session that the law vastly improved the “legal and business environment in Lebanon.” The law’s endorsement was included in Cabinet’s policy statement, as it was recommended by the economic vision for Lebanon produced by global consulting firm McKinsey.

Lawmakers had called for still more adjustments to be made, however, Speaker Nabih Berri intervened and pressed the MPs to pass it quickly.

Laws were also endorsed to organize the professions of eye doctors and speech therapists, as well as to create a retirement fund for the dentists’ syndicate.

Lawmakers also voted to give people whose building projects violated maritime public property six additional months to pay fines to the state.

MPs initially voted not to consider the law, after Berri called for a vote on whether it was urgent.

MP Nazih Najem protested: “How is $800 million in income to the state not urgent?”

Berri then asked once again if MPs wanted to consider the law, and they voted “Yes.”

Berri held votes to determine if several other laws were also urgent.

Most of them failed.

A number of MPs objected to Berri’s count on one such vote.

Many in Parliament raised their hands in favor of maintaining the urgent designation for the law, which aims to prevent the imprisonment of women for refusing to hand their children over to their husbands after losing a custody battle, but Berri determined the vote had failed.

MP Paula Yacoubian, who submitted the law, and MP George Adwan, called for a recount.

Berri refused.

“I’m the first one who wants this to pass, but the vote failed,” he said.

Hezbollah, the Amal Movement and most Future Movement lawmakers opposed the law, with Future MP Samir Jisr claiming it “violates the Constitution.”

But Tabsh, also a Future MP, lamented that consideration of the law had been voted down.

“The vote is always for no urgency when it comes to things related to women, and here we say without a doubt that there must always be urgency with things tied to protecting women and children’s rights,” she said after the session ended.

Adwan told The Daily Star that the LF supported introducing electronic voting in Parliament to avoid such counting disputes and also so MPs could be held accountable for the way they voted. This, however, would require a constitutional amendment. “But we have complete trust in Speaker Berri, if he saw [the vote] that like that, then it was like that,” Adwan said.

MPs cast their votes by raising their hands, though this is often done quickly, making it difficult for those present to confirm how all lawmakers voted.

As he ended Thursday’s session, Berri announced that he would convene Parliament in the second half of March for a session aiming to monitor and oversee the work of the recently endorsed Cabinet.

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