The new tax hike law

Parliament approved a series of tax hikes to finance the new salary scale for public sector workers Wednesday in a heated legislative session that was adjourned before the agenda was completed.

In the second day of a legislative session, held to discuss the 30-item agenda and chaired by Speaker Nabih Berri, lawmakers endorsed a series of proposed taxes.

These included an 11 percent value added tax, raised from the current 10 percent, and a 1.5 percent fee to be added to every appraised square meter of property.

MPs also increased taxes on corporate profits from 15 to 17 percent, in addition to a 7 percent tax increase on deposit interest for both depositors and banks.

The new tax hike law – endorsed to finance the salary scale, which was approved Tuesday – will also see a tax increase on imported alcoholic beverages.

A tax will also be levied on certain kinds of imported tobacco and hookah tobacco. As per the law’s Article 7, the fees would be raised as follows: an LL250 ($0.17) increase on the price of a pack of cigarettes, an LL250 increase on the price of a packet of hookah tobacco and a LL500 increase for cigars.

A fee of LL6,000 will be tacked onto every ton of cement produced.

The new law, with its 20 articles, will also usher in an increase on postage stamps, paperwork and document fees.

Illegally built properties are now to be fined as per the new law’s Article 13.

However, before lawmakers approved the law, they debated whether it would actually produce the desired outcome.

Prime Minister Saad Hariri weighed in on the discussion, saying: “This issue was supposed to have been solved 20 years ago, but it wasn’t because there was no political settlement,” he said. “Today there is a political settlement, so let’s take advantage of that and approve this Article [13].”

Progressive Socialist Party MP Akram Chehayeb echoed the premier’s sentiment, saying that time had come to agree on the article.

“If we moved with this step we would be laying the foundation for something,” he said.

Another debate that led to certain amendments pertained to the article related to imposing fees on non-Lebanese entering the country by land.

The new law now imposes a fee of LL5,000 ($3.32), stipulated in Article 10.

However, the original article imposed the fee on all travelers leaving Lebanon by land, which some lawmakers opposed.

Kataeb Party MP Nadim Gemayel insisted that this tax needed to be imposed on those entering Lebanon rather than those leaving.

Hezbollah MP Nawwaf Musawi also asked lawmakers not to accept the proposal. “We would be creating a disaster for the residents of Tripoli, Akkar, Hermel and Baalbeck,” he said, adding that for many residents of these areas it is easier for them to travel to parts of Syria than to Beirut.Extra fees will also be imposed on travelers leaving Lebanon by air, except for those traveling in economy class, where the fee will remain at LL60,000, as opposed to being raised to LL75,000 after some MPs protested the increase.

The extra fee will, however, affect those traveling in business class, who will pay a tax of LL110,000, and in first class, where the fee will be LL150,000. In addition, travelers using private planes will have to pay LL400,000.

Wednesday’s legislative session picked up the discussion over the law’s articles at Article 10, where it had left off in a previous session in March that was chaired by Deputy Speaker Farid Makari.

The session was held after public sector’s salary hike bill was approved Tuesday, having been initially proposed five years ago. MPs endorsed all 38 articles of the bill, including salary adjustments and social benefits for civil servants, reforms and an 85 percent hike in pensions for retired employees, raising the cost of the bill, which is now estimated at LL1.2 trillion annually.

On the tax bill, agreement wasn’t reached without dispute, as Kataeb leader Sami Gemayel contested the additional taxes at the opening of the session.

When discussions reached Article 12, which has to do with imposing a lump-sum tax on imported containers, Gemayel also voiced his opposition.

“We already discussed this subject,” Berri said, addressing Gemayel.

“We are going to keep discussing it,” Gemayel responded. “We are asking lawmakers to help us.”

“I helped you, now I want you to help me. This is the Treasury – you see the situation [in the country]. The way we were prudent with the salary scale, we need to also be prudent with the Treasury,” Berri replied.

In the session, Berri had said that imposing some taxes is to be expected as long as it generates revenues for the Treasury.

“But the question is: Are these revenues going to go into the Treasury or someplace else?” Berri said.

He expressed his regret that some 37 laws that were endorsed by Parliament are not being fully implemented and called for this to be resolved.

Before Berri adjourned the session until a later, unconfirmed date, Gemayel had asked that every MP vote by roll call. Berri was open to doing so, but did not before the end of the session, prompting Gemayel to shout, “We will appeal the law,” before leaving.