Since the government took the easiest and fastest way to finance the increase in the public sector, both civilians and military, by raising the tax on gasoline and value added, it has been explaining and justifying its hope to absorb resentment and block the way for protests and objections in the street, fearing its repercussions, while the October 17, 2019 uprising in response to a small tax on the “WhatsApp” service is still fresh in the minds of politicians.
If the government’s primary justification for the gasoline tax is that there are no other rapid funding sources currently available to cover the salary increase without the general budget falling into deficit, which is the obsession that has haunted it since the beginning of its rounds of negotiations with the International Monetary Fund, then the response of many economic experts to that is that the government could have avoided the bitterness of the taxes that were “injected” to the entire Lebanese people.
In this context, the economic and financial expert and honorary president of the Harvard University Alumni Association in Lebanon, Dr. Habib Al-Zoghbi, told Al-Anbaa: “The state is still in a position of reaction, not action, while the situation requires surgery at all levels and a courageous and comprehensive revolt.”
He continued, “The military protested against their miserable reality, and the government’s response was to adopt the easier tax that affects all people, affects everyone, and leads to inflation and great harm to the economy and people. Since its formation, it would have been better to carry out real reforms that address the core of the economic and financial crisis, especially since the cost of public salaries is heavy on the state. Statistics for the year 2019 indicated that there are 330,000 employees in the state, and the ratio of the size of the public sector in Lebanon compared to the private sector is one of the largest ratios in the world, and what is required is to address this imbalance surgically and without fear.”
What Dr. Al-Zoghbi said about the burden of public salaries and their cost on the state, despite the fact that the salary of a “state employee” is still small, is supported by several economic opinions that advocate reconsidering state administrations and their size, and in creating job opportunities in the private sector to accommodate those who “exit” or are being “removed” from the public sector, in parallel with stimulating investments and partnerships with the private sector, and thus leaving increasing taxes as a last option in accordance with the saying “the last cauterizing medicine,” and cauterization in an exhausted country like Lebanon is nothing but Taxes.
Speaking about the sources of funding for the public treasury in light of a comprehensive economic vision, Al-Zoghbi said, “The government could have avoided the quick solution, which is taxes, by paying attention to a series of necessary matters, including public marine properties, from whose occupants the state receives only a very small return, while it is able to collect about 300 million dollars a year compared to the 25 million dollars it collects today.”
He added, “Collections must be improved to a much greater extent, and customs control must be greater in a country that relies heavily on imports. There are crushers that operate without accountability or supervision, through which approximately $120 million can be brought into the treasury per year, accessing support funds during the era of President Hassan Diab’s government, and holding accountable those who committed acts of fraud and theft by storing subsidized materials for resale or export.
Opinions converge on the idea that the current government, whose slogan is reform, is no different from its predecessors in adopting improvised “patchwork” tax policies that could lay the foundation for a new financial and economic collapse years later, and this is what prompts some to say that reform in Lebanon until further notice is still just a slogan.
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