Stalled progress

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What­ever taxes come next must be trans­par­ent

Pub­lic work­ers were protest­ing at the end of Septem­ber out of fear the gov­ern­ment might not honor leg­is­la­tion or­der­ing an in­crease to their salaries and ben­e­fits. The pro­test­ers feared that the gov­ern­ment might sus­pend the salary in­crease be­cause the rev­enue it ex­pected to cover the new spend­ing was struck down by a court rul­ing. The Con­sti­tu­tional Coun­cil, Le­banon’s high­est con­sti­tu­tional au­thor­ity, an­nulled a tax law passed in Au­gust by Par­lia­ment that would have brought in rev­enue to cover the deficit ex­pected from the salary in­crease. If the Le­banese gov­ern­ment and Par­lia­ment had just passed a bud­get, which it has un­con­sti­tu­tion­ally failed to do since 2005, then we would not be in this mess.

The Con­sti­tu­tional Coun­cil ruled in fa­vor of an ap­peal, brought for­ward by 10 MPs that ar­gued the tax law vi­o­lated Le­banon’s con­sti­tu­tion. In its rul­ing de­ci­sion—that can­not be chal­lenged—the court said it an­nulled the tax law for sev­eral rea­sons:

(1) the vote vi­o­lated Par­lia­ment’s vot­ing rules—they should have called a roll call vote, but in­stead, the vote was tal­lied by a raise of hands;

(2) the tax law vi­o­lated Ar­ti­cle 83 of the con­sti­tu­tion be­cause new rev­enues and ex­pen­di­tures must be in­cluded in the bud­get for the next fis­cal year and vi­o­lated Ar­ti­cle 87 of the con­sti­tu­tion that says the gov­ern­ment must close its fi­nan­cial ac­counts at the end of each fis­cal year with par­lia­men­tary ap­proval;

(3) The rul­ing also took is­sue with Ar­ti­cles 11 and 17 of the law. The for­mer con­cerned the tax­a­tion of il­le­gal coastal prop­er­ties, which the court ruled con­tra­dicted the con­sti­tu­tion be­cause the tax was not clearly de­fined. The lat­ter raised the tax on the in­ter­ests on de­posits, which the court ruled vi­o­lated the prin­ci­ple of equal­ity vis-a-vis the tax bur­den.

On the court’s first point, it is sur­pris­ing that Par­lia­ment—whose Speaker has held the po­si­tion for 25 years, and whose mem­bers, thanks to twice ex­tend­ing their own terms, have served for at least eight years— can­not prop­erly vote on a law.

On the se­cond point, in March the Cabi­net ap­proved the bud­get for 2017 and re­ferred it to Par­lia­ment, which has yet to vote on it. Still, the 2017 process was an im­prove­ment on the 11 pre­vi­ous years, in which Le­banon went en­tirely with­out a state bud­get—for rea­sons that are quite be­yond ra­tio­nal ex­pla­na­tion. The clo­sure of pub­lic ac­counts was an im­ped­i­ment, but ac­cord­ing to Alain Bi­fani, di­rec­tor gen­eral of the Min­istry of Fi­nance, pub­lic ac­counts have been rec­on­ciled back to 1997. The gov­ern­ment should now be fi­nal­iz­ing the 2018 bud­get and send­ing it over to Par­lia­ment to vote on.

On the third point, the court’s re­marks on Ar­ti­cle 11 and 17 of the tax law are be­ing ad­dressed by the gov­ern­ment, ac­cord­ing to a Min­istry of Fi­nance state­ment, with­out elab­o­ra­tion. Lo­cal re­ports tell of an ex­pe­dited tax law, which is un­likely con­sid­er­ing the court has just ruled that taxes can­not be leg­is­lated in the ab­sence of a state bud­get. Hope­fully, the min­istry’s state­ment was re­fer­ring to amend­ments to those ar­ti­cles that will be in­cluded in the bud­get, but at time of pub­li­ca­tion the gov­ern­ment’s in­ten­tion was not clear.

Af­ter the court is­sued its de­ci­sion, some of­fi­cials at­tacked the court’s rul­ing, ar­gu­ing it in­fringed on Par­lia­ment’s right to leg­is­late the new taxes, while other of­fi­cials called for sus­pend­ing Ar­ti­cle 87 of the con­sti- tu­tion. “If they’re cor­nered, let them search for a so­lu­tion to the prob­lem that they’ve cre­ated in­stead of at­tack­ing the Con­sti­tu­tional Coun­cil’s de­ci­sion,” pres­i­dent of the court, Judge Is­sam Sleiman, said in a state­ment to lo­cal me­dia. The “so­lu­tion [is] ap­prov­ing the state bud­get and the nec­es­sary au­dit­ing be­cause their ab­sence for more than 10 years opens the door for the waste of pub­lic money and the spread of cor­rup­tion across all the junc­tions of the state,” he added.

Un­less some­body chal­lenges a law in front of the Con­sti­tu­tional Coun­cil—which re­quires 10 MPs’ sig­na­tures—the court will not re­view a law on its own ini­tia­tive. If that is the case, which it seems to be, the Con­sti­tu­tional Coun­cil was act­ing as a safe­guard, not an ini­tia­tor. The ques­tion then is, if Par­lia­ment re­tooled the tax mea­sures, would they be chal­lenged again, or would the mea­sures be safe if added to the bud­get? At the end of Septem­ber, as Ex­ec­u­tive went to

The vote vi­o­lated Par­lia­ment’s vot­ing rules—they should have called a roll call vote, but in­stead, the vote was tal­lied by a raise of hands print, it was not yet clear what, if any, al­ter­na­tive would be pur­sued.

What this pub­li­ca­tion de­mands is a re­turn to bud­getary dis­ci­pline and an or­derly bud­getary process in cabi­net and in Par­lia­ment. Par­lia­ment should de­bate a bud­get’s mer­its trans­par­ently, not keep it hid­den from the peo­ple.

On the ques­tion of tax fair­ness, be­cause it seems the is­sue was at least a part of the ap­peal to, and rul­ing of, the court, at this point it is dif­fi­cult to say which taxes would be fair, or which would be ad­e­quate. The de­bate was not trans­par­ent—the pub­lic did not know for sure which taxes would be levied un­til they were pub-

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