Amended draft budget on Cabinet agenda next week

GCLU calls for higher taxes on corporate profits and a tax on public properties

A new modified version of the 2012 budget plan will be put before Cabinet next week. “The Cabinet agreed in its session on Wednesday to adopt a budget with no additional expenditures or revenues,” Prime Minister Najib Mikati told private sector business leaders.

The 2012 draft budget has come under criticism from both labor unions and private sector business leaders.

Private sector economic bodies have been pushing the government to remove proposed tax increases from the budget plan. They argued that raising taxes at this time will result in destructive repercussions. The president of the Association of Banks in Lebanon (ABL), Joseph Torbey, said if the draft budget passes with the proposed tax increases, it would crush the country’s economy. He said State revenues should be increased by stimulating economic growth rather than through additional taxation.

The General Confederation of Labor Unions (GCLU) utterly rejected any increase in VAT, and suggested more taxes on corporate profits. “The GCLU rejects the 2012 draft budget, especially the 20 percent increase in VAT it proposes,” said Ghassan Ghosn, president of the GCLU. The budget suggested raising the VAT from ten to 12 percent. In 2011, VAT revenues totaled $2.1 billion. If the VAT rate was raised, potential revenue could rise to $2.5 billion.

The GCLU demanded exempting gasoline and gas oil from all taxes. Ghosn suggested increasing Treasury revenues by imposing a progressive tax on corporate profits, as well as introducing taxes on publicly owned properties, like the country's sea front which is used by tourism establishments and beach resorts, as well as on rock quarries. According to Ghosn these taxes would bring 20 percent more revenues to the Treasury than the revenues anticipated from the increase in VAT. He said these estimations were made by the revenues department at the Ministry of Finance. Ghosn suggested a ten percent tax on property sales, and called for a tax on unoccupied residential properties.

The GCLU reiterated its call to hold a national dialogue to discuss pressing economic issues, and voiced support for current popular demands. It called for permanently employing contract workers at EDL, and urged the implementation of the wage increase for government employees. The GCLU issued a similar statement last week criticizing the Cabinet’s performance in tackling social and economic concerns, mainly the unrelenting power blackouts.


Reported by Hanadi Chami