The Minister of Economy explains: Taxes are a solution to confront deficit and inflation

The Minister of Economy and Trade, Amer Al-Bassat, stated in a statement to the National News Agency that there is “a legitimate right upon which there is a national consensus to increase the salaries of public sector employees, especially the military forces,” considering that “the sacrifices made by the military sector do not match their salaries and the matter must be fixed.”

Al-Bassat stated that increasing salaries would incur a heavy cost to the state estimated at $800 million, which would require providing parallel sources of income. He warned that “raising expenditures without securing revenues creates an economic crisis and increases inflation and pressure on the lira,” noting that the “first line of defense” for securing revenues lies in improving tax collection and combating tax and customs evasion, in addition to reconsidering the value of fines on land and sea properties and crushers. However, he explained that the revenues from these measures “are not sufficient to cover the cost of the increases.”

He added: “Therefore, we decided to go to the second line of defense, which is to impose a tax on gasoline and raise the value-added tax (TVA).”

The minister stressed that imposing a tax on gasoline would lead to an increase in prices, “but not in the way that is being talked about,” stressing that the Ministry of Economy “is on the lookout to prevent some merchants from exploiting this matter and raising prices randomly.” He pointed to the increase in supervisory patrols and the imposition of fines on violators and referring them to the judiciary, indicating that the Ministry has carried out 1,500 rounds since the beginning of the year, during which it issued less than 100 reports.

He also revealed a series of meetings and communications conducted by the Ministry with the authorities concerned with the food and basic commodities file, and obtained a pledge from the unions of supermarkets, bakeries, and importers to maintain current prices, stressing “not to allow taxes to be exploited to raise prices.”

In a related context, Al-Bassat spoke about the “Join Fasting” initiative, which was launched by the Ministry in cooperation with supermarket owners and food importers, and aims to reduce the prices of a basket of 21 basic food items by a rate ranging between 15% and 20% in 27 supermarkets and 180 points of sale throughout Lebanon, expressing his hope that the initiative will expand in the future to include a thousand items in various commercial stores.

He believed that the government measures were necessary “for a moral reason related to the salaries of employees and military personnel,” stressing that he would work to prevent any unjustified increase in prices, noting that there were complaints about high prices, but he did not notice “a significant increase following the imposition of new taxes,” while acknowledging the existence of limited cases of exploitation.

Regarding linking the salary increase to the approval of the TVA tax, he explained that the House of Representatives is the one that approves the increase and the tax and can separate them, “but if the increase is approved without the TVA, this will lead to a deficit.”

As for the proposals calling for reducing the dollar exchange rate to 60,000 pounds, he confirmed that the decision is up to the Bank of Lebanon, explaining that fixing a lower exchange rate requires providing sufficient dollars, and he asked: “Are there enough dollars? And if we use the dollars we have, these dollars will return to the depositors.”

Regarding the public sector restructuring file, Al-Bassat indicated that the number of public sector employees is less than 9,000 employees, pointing out that the vacancy rate in the Ministry of Economy is 93%. He stressed that restructuring is necessary, but not by laying off employees, especially in the military sector, which he described as “very important for national security,” considering that the current stage calls for increasing its numbers.

On the other hand, he stressed the necessity of restructuring state departments and institutions and merging some ministries, “but not at the expense of employees who are unfairly considered unproductive in general.”