Business leaders resist new taxes

Budget to raise import duties on cars, cigarettes, alcohol, and raise fiscal stamps' value

“Increasing the tax on luxury items and raising fiscal stamps' value will deal a direct blow to investment,” the economic bodies warned on Monday. Private sector business leaders issued a statement expressing concern over the new budget plan. They said the budget was not clear enough in terms of the additional taxes and fees proposed.

“The draft budget includes raising fees on three items, cars valued at above $35,000, cigarettes, and alcoholic beverages, and it raises fiscal stamps,” said Mohamad Choucair, president of the Federation of Chambers of Commerce, Industry, and Agriculture. The fiscal stamp will be increased by LL400, stamps used in commercial contracts will be increased by LL1,500, and a new LL2,500-stamp will be introduced for fixed line and mobile phone bills.

The authorities expect the tax increases to secure additional revenues of $750 million for the Treasury. Projected revenues expected from raising VAT to 12 percent were around $450 million.

Choucair supported higher customs duties on cigarettes, but warned that higher import duties on alcohol could backfire. “If we raise duties on alcohol imports it might hurt our exports of wine because countries can do the same through the principle of reciprocity in international trade.”
The 2012 draft budget, adopted by Cabinet last week did not include the disputed increase in VAT and the tax on interest earned on bank deposits. But the budget plan also excluded proposed new spending, mainly a new salary scale for government employees. Prime Minister Najib Mikati had earlier said these expenditures will be covered through additional taxes. According to Choucair, a higher tax on the consumption of nonessential items can be inefficient: “If a (higher) tax was applied to clothes consumers who carry dual citizenship can reclaim their VAT at the airport, others will buy their clothes from abroad.”

Choucair said such times require regulations that encourage investors and not new tax burdens. “But above all we need political stability and security.”

Reported by Hanadi Chami