Banks reject new tax measures

ABL working on new proposals
to fund the salary scale

The Association of Banks has rejected the taxes proposed by the Joint Parliamentary Commissions to finance the increases in the salary scale for public employees. The banks refused the proposal of increasing the tax on interest on deposits from five to seven percent. They also rejected the tax on bank subscriptions to Treasury Bills (TBs), and a new tax on profits of companies traded on the stock exchange, including banks, which would go up from 15 to 17 percent.

The Association of Banks in Lebanon (ABL) convened all banks to go on strike on Friday April 11 to protest against these proposed measures.

A delegation from the ABL met with the Minister of Finance Ali Hassan Khalil. “Negotiations were positive. The Ministry of Finance is welcoming the initiative by the ABL. We are also open to any initiative from the Ministry of Finance,” said François Bassil, Chairman of the ABL. “We are working together on some proposals,” he said.

The new increase in taxes will affect the income of depositors, mainly those who have surpassed the age of retirement, the ABL said. “We expect deposits to flee toward Dubai, Jordan, or even Cyprus which is recovering from crisis,” said Bassil.

The ABL said: “Interest rates on all loans, including housing, personal, and retail loans, will automatically increase, as well as those to businesses, mainly Small and Medium Enterprises (SMEs), which represent a main pillar of the economy”.

The tax proposal is seen as a punishment to banking institutions that proved a high resilience and competence against different political and security challenges, the ABL statement said. “Only banks have been assuming over the years the responsibility of protecting the State from collapse and financing the economy through the public and private sectors,” it said.

“Reforms should take place by handling the EDL issue, improving tax collection, fighting corruption and fiscal evasion, and increasing the efficiency of public administrations,” said Bassil.