New taxes and fees: Tobacco, alcohol affected. To discuss property levies next week

Several tax hikes and amendments in Custom fees were approved by Parliament this week. The hike aims to finance an anticipated rise in public sector employees' salaries.

VAT will be increased to 11 percent from the present rate of ten percent. Fiscal stamp fees were increased from three per thousand to four per thousand. A new custom tax has also imposed on imported alcoholic beverages, and all tobacco products. New taxes will be implemented once signed by the President and published in the Official Gazette.

Taxes on imported alcohol were previously levied as a fixed sum on the volume. Tax on each liter of beer was LL60 ($0.04), on whisky, gin, and vodka LL400 ($0.26), and on wine and Champagne LL200 ($0.13).

Michel Abi Ramia, Chairman of the Syndicate of Traders and Importers of Alcoholic Beverages, said that the new tax will now be levied as a percentage of the price of each bottle: Beer 15 percent, whisky 25 percent, and wine 35 percent.

Abi Ramia said: "The old way of taxing alcohol was unfair. It was the same whether for inexpensive or expensive bottles."

He said that the new tax will increase smuggling and counterfeiting.

A new lump sum tax was imposed on both imported and manufactured tobacco products, which is LL200 ($0.13) on cigarettes and tombac tobacco, and LL500 ($0.33) on cigars.

The hike will boost VAT revenues ten percent. Calculated on 2016 VAT figures, this will add $215 million to the Treasury. It will increase prices to consumers by around one percent. The fiscal stamp fees have potential to get more than $100 million into State coffers.

Salim Wardeh, Vice Chairman of the Syndicate of the Producers of alcoholic beverages, said: "The new tax is expected to bring $26 million to the government, but only if it is implemented transparently, and only if alcohol consumption doesn't decrease.

According to Customs, imports of alcoholic beverages reached $70 million last year. Imports mainly came from the United Kingdom, France, Germany, Italy, and Russia. Tobacco imports reached $160 million last year. Turkey, Switzerland, Egypt, and Germany were the main exporters.

"We don't object to increasing taxes provided the government fights smuggling and tax evasion, resulting in uncollected tax revenues of nearly $1.5 billion," said Mohammad Choucair, Chairman of the Federation of Chambers of Commerce, Industry and Agriculture.

Wardeh said: "It's better to control the waste of public money during the collection of Custom fees, and in the electricity sector, rather than imposing taxes on imported products in a stagnated economy."

The country has signed several trade agreements, including with Europe, the main supplier of alcoholic products, which prohibits imposing custom fees on imported products.

Wardeh said that this decision is against the trade agreements, and will push these countries to treat us in a similar way, and impose taxes on our exports.

Customs taxes can be imposed only for a specific period of time and for a specific sub-sector in which the practice of dumping has been proved. Or if it is proved that the imported products have been subsidized by the government of their country of origin.

According to Naamatallah Abi Nasr, Member of Parliament, Parliament will discuss next week increasing taxes and fees on maritime property, built property, rental value, and property sales.

Reported by Shikrallah Nakhoul and Rania Ghanem