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| 03 October, 2017

Lebanon's parliament set to tackle draft tax law

Lebanese members of parliament attend a session in Beirut.

Lebanese members of parliament attend a session in Beirut.

REUTERS/Mohamed Azakir

Parliament is expected to meet in the next few days to pass draft laws approved by the Cabinet dealing with tax amendments

BEIRUT: Parliament is expected to meet in the next few days to pass draft laws approved by the Cabinet dealing with tax amendments, the public sector’s salary scale law and a settlement of extra-budgetary spending in past years, ministerial sources said Monday. “The Cabinet has sent to Parliament an expedited draft law that includes amendments to the tax law, in addition to a draft law calling for the postponement of the payment of public sector employees’ salaries if revenues are not secured,” Deputy premier and Health Minister Ghassan Hasbani told The Daily Star. “I expect Parliament to convene this week to approve these draft laws.”

Hasbani is one of the three Lebanese Forces ministers who voiced their reservations during last week’s Cabinet session over the ratification of the 2017 draft state budget before the audit of extra-budgetary spending.

The Cabinet last Friday wrapped up four emergency sessions by reaching a deal that effectively calls for a new tax law and for the state budget to be ratified without the audit of extra-budgetary spending, finally paving the way for the payment of public sector employees’ salaries based on the new salary scale. In fact, civil servants, public schoolteachers and the military began receiving their wages last Saturday based on the new salary scale.

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The Cabinet agreement had led to the suspension by unions, representing thousands of civil servants, workers and schoolteachers, of a five-day nationwide strike that had paralyzed the country and closed schools.

Prime Minister Saad Hariri said that the Cabinet reached an agreement on an expedited draft law that includes the necessary tax amendments, taking into account the observations of the Constitutional Council, which last month revoked the tax hike law that would have funded the salary scale law, estimated to cost more than $800 million annually.

Hariri added that the Cabinet also agreed on a formula to settle the extra-budgetary spending. Lebanon has not had a state budget since 2005 due to political bickering, leading to extra-budgetary spending in billions of dollars.

A source close to Hariri confirmed that the Cabinet has sent the draft laws concerning the tax amendments and the salary scale to Parliament for approval as soon as possible.

But a parliamentary source close to Speaker Nabih Berri said the speaker was still waiting to receive the draft laws before scheduling a Parliament session to endorse them.

Referring to the row over the ratification of the state budget, the source told The Daily Star: “The 2017 state budget has been finalized by the parliamentary Finance and Budget Committee which is supposed to send it to [Parliament’s] general assembly for debating and approving it.”

Asked about the potential solution to the audit of extra-budgetary spending, the source said: “During the Parliament session to be held, the prime minister will pledge that the Cabinet will carry out a breakdown of extra-budgetary spending within a specified period.”

Ahead of the expected Parliament session, a delegation of the Economic Committees, headed by the president of Beirut Chambers of Commerce and Industry Mohammad Choucair, presented to Hariri a document containing their observations on the tax hike law.

“I think the suggestions that we submitted to Prime Minister Hariri are good and the basic point rejected by the Economic Committees is the double taxation, Article 17 of Law 45, because it is against the Constitution and affects not only the Lebanese banks, but all the Lebanese institutions whether banking, financial, industrial or commercial,” Choucair said after the meeting held at Hariri’s Beirut Downtown residence. He said the committees would meet with President Michel Aoun, Berri and Finance Minister Ali Hasan Khalil for the same purpose.

Choucair lamented that while the government is calling on Gulf citizens and Lebanese to invest in Lebanon, saying: “But who will invest in Lebanon while seeing all these taxes and double taxation?” He did not give details of the suggestions.

“The economic situation doesn’t bear more burdens. Today we are talking about the [salary] scale, taxes, increasing private sector wages, so where are we taking the country with all this?” Choucair asked. “With other increases, we will be destroying the economy, and if we continue like this, the economic collapse will happen quickly, God forbid.”

Sunday night, Hariri met at his residence with MP Walid Jumblatt, who was accompanied by former minister Wael Abu Faour, discussing with him the general situation and latest local and regional developments, a statement from Hariri’s media office said.

Meanwhile, Aoun underscored the importance of cooperation between the Cabinet and Parliament, calling for issuing a decree to implement laws.

“Cooperation between the executive and legislative powers ensures higher national interest, strengthens the regular functioning of constitutional institutions and preserves political stability in the country,” Aoun said during a meeting with a parliamentary committee tasked with overseeing the implementation of laws endorsed by Parliament.

“The reform process, which has begun, will go on and will not be blocked by any barrier and it will take place in stages,” Aoun said.

The Free Patriotic Movement called for a quick endorsement of the state budget, putting an end to the waste of public funds, controlling spending and a settlement of outstanding financial accounts.

A statement issued after a meeting of the FPM’s political council chaired by FPM leader and Foreign Minister Gebran Bassil also called for an immediate solution to the Syrian refugee crisis.

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