Lebanon Businessnews News

Calls to adopt 2012 budget with no tax hikes
“$6.8 billion extra spending draft law pointless in presence of budget draft,” Azour
Share     Share on Facebook     Share on LinkedIn    
The 2012 budget should be passed without any additional taxes, according to the Economic Parliamentary Committee which convened recently. The meeting was attended by Central Bank Governor Riad Salameh, as well as other key officials and leaders of private sector associations.
The committee underlined the need for the government to adopt a national budget in order to clearly define its economic policies for all productive sectors.
Las week, the government approved a draft law allowing the Cabinet to get $6.8 billion in Treasury loans to cover government expenditures for the year until a state budget is approved.
Economists and financial experts criticized the move, which they said was pointless especially as the 2012 draft budget awaiting approval by in Cabinet.
Former Minister of Finance, Jihad Azour, called for revoking the $6.8 billion draft law: “The priority is for adopting a national budget.”
The Minister of Finance Mohamad Safadi submitted the 2012 budget draft to Cabinet last month. Lebanon has been without a state budget since 2005. In its May 15 report, the EU commission had stipulated the adoption of a budget as a precondition for obtaining EU financial support.
Economists also argued that the government must cut spending and avoid tax increases.
According to Azour, the bulk of the $6.8 billion will be used to cover administrative and operational costs: “These costs are constant and cumulative on a yearly basis, thus they do not stimulate the economic cycle and will (lead to) future tax hikes.”
Economist Elie Yashoui said this is the first time the government issues treasury loans in such large amounts. He said that such loans under previous governments used to range between LL1,000 billion and LL2,000 billion (under $1.5 billion).
Yashoui said adopting a balanced State budget is inevitable to reform public spending: “The State should hand over investments in infrastructure to the private sector. This way (the government) would cut down expenditures and would not be forced to claim more taxes.”

Reported by Abeer Darwiche

Date Posted: Jun 19, 2012
Share     Share on Facebook     Share on LinkedIn