Cabinet endorses 2012 budget draft
No new taxes, spending likely to remain flat
The Cabinet finally ratified a budget for 2012. The plan adopted is an amended version of the last draft submitted by Minister of Finance Mohamad Safadi. If approved by Parliament, it will be the first national budget since 2005.
Prime Minister Najib Mikati earlier said that the Cabinet agreed to adopt a budget with no additional expenditures or revenues. The budget plan will be based on spending made in 2011, said former Minister of Finance, Raya El Hassan. Spending last year stood at $12 billion, while revenues totaled $8 billion.Hassan said the budget draft lacks focus and policy thinking: “It does not recognize important expenditures, like the salary scale for public administration employees.”
Hassan said the budget draft will likely pass in Parliament. She said there are several ways for adopting the draft: “They can wait until the public accounts are audited, which MP Ibrahim Kanaan said would be done by September, or adopt the budget before the audit is completed, like in 2005 and before. They can also adopt a budget without auditing the public accounts at all.” She said "there is always a way when there is a political will".
The size of the original draft budget, as proposed by Safadi, was $14 billion. Total projected revenues were $9.8 billion. The budget draft called for a number of tax reforms. The plan called for several tax increases, mainly raising VAT to 12 percent and the tax on interest on bank deposit to eight percent, and introducing a three percent tax on land transactions.
Reported by Hanadi Chami
Date Posted: Jul 11, 2012