Lebanon okays tax law to finance pay rise
beirut — The Lebanese government approved a new tax law on Friday to fund a public sector pay rise, Prime Minister Saad Al Hariri said, signalling an end to a crisis that led many workers to go on strike.
The constitutional council, a branch of the judiciary, last week annulled an earlier version of the tax law that was designed to raise the revenues needed to finance the pay increase, which comes into effect in a few days’ time.
“We have reached a refined law that includes the necessary tax amendments,” Hariri said after a cabinet session.
The cabinet plan must now be referred to parliament before it can become law.
The parliament swiftly approved
We have reached a refined law that includes the necessary tax amendments Saad Al Hariri, Lebanese PM
the earlier version of the law before the constitutional council struck it down.
Prime Ministe Hariri’s government in March agreed the first state budget in 12 years, but that has yet to be approved by parliament.
Some Lebanese economists and businesses have criticised the higher pay rate and taxes, which represent one of the most significant decisions of the coalition government appointed in December after years of political paralysis.
The constitutional council had found the tax hikes to be unlawful for reasons including the government’s failure to approve them as part of a budget.
Lebanon has a debt-to-GDP ratio of 148 per cent, among the highest in the world, and the finance minister has previously estimated that the pay rise would cost $917 million.
The proposed hikes included increases in value-added tax, corporate tax, levies on alcohol and tobacco, lottery prizes and interest on bank deposits, as well as increases in fees and fines. —