Economy hungry for cabinet action

Experts set policy recommendations for improving socio-economic welfare

June 20, 2011- The economic challenges facing the new government remain serious despite the postwar reconstruction programs, the Lebanese Center for Policy Studies (LCPS) said in a report addressing the socio-economic priorities of the new government.

The report, released following round-table discussions with independent economists late May, said that the achieved average yearly real economic growth rate of 4.4 percent over the past 17 years is relatively low.
The meeting was attended by Fares Abi Saab, Ghaleb Abou Mosleh, Sami Atallah, Ghassan Dibeh, Kamal Hamdan, and Nizar Saghieh.

The report cited huge discrepancies in growth between various economic sectors. “The rate of growth in the banking, trading and tourism sector grew in comparison to declining growth rates in the industrial and agricultural sectors,” it said.

It said the remittances’ flow has fueled consumption much more than investment which partly contributed to the rise in real estate price.

The report said the new government should establish new fiscal policies aimed at reducing the gap between various income groups, through reforming the tax system and the government’s spending policy. It said the tax system should be made more progressive through the imposition of new and higher taxes on wealth and high incomes, which could include reforming the real estate tax, increasing the tax rates on corporate profits and on income from interest rates. The report said the government should reduce indirect taxes, widen the exemption basket of the VAT system, and lower the gasoline and telecommunications taxes.

The new cabinet should enact an industrial policy that complements the industrial and agricultural sectors, improves their competitiveness, and encourages the export of high valued goods, it said.
It said the new cabinet should dismantle the monopolistic structures and practices to make the economy more competitive.

The report said the government should launch a public investment program for rebuilding and upgrading public infrastructure, work on a comprehensive health plan policy, and establish a National Poverty Eradication Program.