The evening session devoted to examining the budget resumed at 6 p.m. in Parliament. (Credit: Ali Fawaz/Lebanese Parliament)
BEIRUT – For the first time since the mid 2000s, Lebanese Parliament was on schedule with the process of discussing a proposed budget draft. Around 11 a.m. Wednesday, Parliament launched the session to vote on the state budget for 2024.
However, the draft – which contains 96 articles – remains flawed on several levels.
The preliminary draft budget was written over the summer by the Minister of Finance, who then forwarded it to the Council of Ministers. Amendments were made, and once they were agreed upon by all ministers, the Cabinet then forwarded the draft budget to Parliament, where the Finance and Budget Committee reviewed it.
One of the main points of contention discussed during the parliamentary session was the government's goal to increase its revenue by mainly relying on indirect taxes such as the VAT, which are regressive; meaning it is the poorest in the country who will bear the brunt of that burden.
The government plans to increase some progressive taxes, such as the income tax for non-residents. However, the breakdown between indirect and direct taxes still favors the more affluent in the country.
The draft law in its current form, has the government expecting 4.4 times more revenue from VAT than from taxes on income and capital.
President of the Parliamentary Finance and Budget Committee Ibrahim Kanaan pointed out that "the Finance Committee canceled articles related to tax changes and the introduction of new taxes and fees because they violate the Constitution, while the government's objective is to obtain additional revenue for the Treasury without taking into account economic and social conditions or the economy's capacity to bear them."
MP Jamil al-Sayyed, also denounced the draft budget: “This is not how budgets are made. We try to find public revenues everywhere before going into the pockets of citizens.”
MP Elias Bou Saab said that this draft budget does not meet the needs of public health, education, public institutions, the security forces nor the army.
MP Michel Mouawad considers the draft budget as going against the interest of citizens, the private sector and public institutions and their civil servants, to the benefit of the “leaders of clientelism.”
Mouawad added that there are four ways to increase state revenues: enlarge the size of the Lebanese economy; improve the management of public resources; combat tax evasion and enlarge the tax base; and finally increase taxes. It seems that the government has decided to go for the fourth option, the one that affects Lebanese citizens the most.
The debate became heated as tensions rose causing MP Melhem Khalaf to walk out early after calling for the immediate election of a new President and stating his refusal “to participate in the violation of the Constitution.”
The country has been experiencing a presidential vacuum since October, 2022.
Karim Daher, member of the Lebanese Association for Taxpayers’ Right and Information told L’Orient-Le Jour in an earlier report that the draft still “lacks vision” and that “we are left with a budget that attempts to only secure revenues to finance government expenditure, not to mention certain measures that will not strengthen fiscal discipline and compliance."
Besides the almost nonexistent level of public investment, essential reforms such as optimizing staffing levels in an overcrowded public sector are completely absent.
“We are here to say no to this budget,” said MP Mouawad.
The session is scheduled to continue tomorrow. Only 16 out of the 40 MPs who asked to speak during the two-day session took the floor today.