Lebanon’s 2024 budget: economic observations and scandalous violations
Today, Wednesday, the Lebanese Parliament began discussing Lebanon’s draft budget for the year 2024, as amended by the Parliamentary Finance and Budget Committee, in the wake of a torrent of economic comments that point to the authority’s continued pursuit of “patchwork” policies devoid of any financial vision, tax justice, or social benefits, while the expansion continues. It has its hand in the pockets of citizens, and “destructs” their purchasing power.
Parliament held a session this morning headed by President Nabih Berri, which will be continued in the evening and tomorrow, Thursday, to discuss Lebanon’s draft budget. It witnessed violent debates and verbal exchanges between some representatives and a throwing of responsibilities and accusations, especially between MP Ali Hassan Khalil, who belongs to Berri’s “Development and Liberation” parliamentary bloc. The representative of the “Forces of Change” is Firas Hamdan. The debate expanded before things calmed down, while representatives registered their objection to the legislation before the election of a president of the republic.
The Chairman of the Finance and Budget Committee, Representative Ibrahim Kanaan, began the interventions by presenting the amendments made by the committee to the draft general budget law issued by the caretaker government, which, as he put it, was characterized by “randomness in the introduction of taxes and fees, and he noted the absence of an economic and social vision.”
Kanaan said, “The Finance Committee canceled articles related to tax amendments and the introduction of new taxes and fees for violating the constitution, especially since the economic and social vision is absent, and the government’s goal is to secure additional revenues for the treasury without taking into account the economic and social conditions, the economy’s ability to finance, and the citizens’ ability to endure.”
Details of Lebanon’s budget
In a refutation of Lebanon’s budget carried out by “Information International”, the total expenditures amounted to 295 thousand billion and 113 billion and 451 thousand liras, equivalent to 3.3 billion US dollars (exchange rate of 89,400 liras to the dollar, according to the average actual price of the dollar specified on the Ministry of Finance’s website), at a rate of seven. Multiple times that of the 2022 budget.
44.66% of expenditures, i.e. of Lebanon’s total budget, were allocated to allocations, salaries, wages, social benefits, retirement pensions, end-of-service compensation, and transfers to the public sector.
On the other hand, total revenues reached the same number, i.e. a total of 3.3 billion US dollars, and are distributed between tax revenues, which amounted to 77.8% of total revenues, and non-tax revenues, which amounted to 22.1% of total revenues.
In this context, the researcher at “International Information” Sadiq Alawiyah told “Al-Arabi Al-Jadeed” that this budget “acknowledges the inability” to correct any possible path in which to address the difficult administrative and service situation for citizens, and the inability of the public treasury to collect and collect the taxes and fees owed, stressing that It confirms that we are still in a stage of uncertainty in terms of growth or economic indicators.
First, Alawiyah says, “It is clear that the expenses allocated to running the administration and public institutions are insufficient, and mean continuing to fail to address the issue of the cessation of providing public services to citizens in a good manner, or the proper management of public facilities, even at the minimum, and this is clearly evident through the provisions of Maintenance and equipment, which does not exceed 9% of the total appropriations.
On the other hand, Alawiyah, who refuted Lebanon’s draft budget, adds that customs and import duties, for example, are less than 2% of the value of imports, which are approximately 15 to 18 billion dollars, while the total imported duties do not exceed 330 million dollars, and this number is very low. .
Double the fees
Likewise, the researcher at “Information International” and a member of the Economic, Social and Environmental Council in Lebanon points out that the Finance Committee adopted a principle that it considered to be unified, to multiply all fees by 46 times, and this principle was not successful, as some fees should have been raised by a greater percentage, especially Those that affect the environment or health, while other fees affecting poor citizens should have been reduced.
He added, “Even if the fees and taxes previously proposed by the government in the 2023 budget or the draft Lebanon 2024 budget were cancelled, some of the fees were reduced for the capable parties. For example, it is not reasonable to double the fees due on owners of electric generators by only 6 times. This is the case.” It is illogical, and prompts the question why they did not rely on the 46-fold principle.”
Regarding revenues, Alawiyah says, “The government estimates that it will collect revenues equivalent to 15.6 times what was actually collected in 2021, and this may be close to reality, because the number is small, but it is far from logical, because the government and the Ministry of Finance must collect larger amounts.” .
He also points out that approximately 44.66% of expenditures, that is, of the total budget, are for allocations, salaries, wages, social benefits, retirement pensions, end-of-service compensation, and transfers to the public sector, which means that the budget did not provide anything for maintenance and repair of institutions and to improve the salaries and wages of workers in the public sector, indicating The total budget is equivalent to 3.3 billion dollars, which indicates that it is the budget of a major company, and not the budget of a state that provides services.
Accordingly, Alawiyah points out that “all amounts received for the benefit of the ministries, whether health or public works, are expenditures that are considered minimally operational and are not sufficient for the proper operation of public institutions and administrations. Therefore, we are still in what the World Bank calls uncertainty.”
Alawiyah also points out that the budget does not adopt an exchange rate, but rather includes different forms of numbers, stressing that the budget targets compensation for workers whose employers declare that they receive their salaries in US dollars.
For its part, the “Legal Agenda” refuted serious constitutional violations included in the budget, including that the draft law that was referred by the government to the House of Representatives is not the same as the draft that was approved by the Council of Ministers on 9/12/2023, as the Ministry of Finance made fundamental amendments to the draft aimed at Mostly, the provisions of the 2023 draft budget were merged into it, in line with the recommendation of the Parliamentary Finance and Budget Committee.
Also, among the violations that the “Legal Agenda” stopped at was not sending a draft law related to cutting off the account for the year 2022, including in the budget a tax settlement that had previously been invalidated by the Constitutional Council, and also including dozens of articles that deviate from what should be included in the law, and these are the articles that are called knights. The budget is foreign to it because it is not related to expected revenues and expenditures and the texts affecting them.
Annual budget
The government also violated the principle of annual budgeting, and noted that direct taxes were unfair in the absence of a commitment to a unified exchange rate, as the Finance Committee made important amendments to the mechanism for imposing taxes included in the government’s draft in terms of shares and discounts, doubling them 60 times compared to what they were. In 2019, which is equivalent to the rate of collapse of the exchange rate according to the market price.
This trend has been generalized in relation to the transfer fee, the tax on built properties, a tax on commercial, industrial and professional profits, in addition to the tax on salaries and wages. However, adopting this doubling on the basis of the market price was not accompanied by an explicit adoption of the same exchange rate in calculating the amounts received in foreign currency. Rather, the draft budget left room for applying different exchange rates in relation to these fees and taxes.
In order to exempt large companies from their responsibilities, the Finance Committee added to the draft law another knight of the budget, which was to determine the basis for calculating end-of-service compensation for private sector employees. Accordingly, Article 93 stipulates that these compensations be calculated at a value of 15,000 Lebanese pounds per dollar to calculate the end-of-service compensation for the period before 1/1/2024, provided that compensation for the following period is calculated in accordance with the provisions of the Social Security Law.
Thus, the draft law has reduced the end-of-service compensation (which is a monthly allowance equivalent to the final allowance for each year of work) six times, as long as the actual exchange rate is 90,000, that is, 6 times the exchange rate approved in this article. The reduction in this compensation is likely to worsen if the Lebanese pound continues to collapse.
Noting that the Bank of Lebanon informed a number of representatives that it absolutely refuses to adopt an exchange rate of 89,500 pounds in the budget, and that the matter will remain subject to the outcome of the related negotiations and discussions in this regard.
The Note also touched on generalizing the value-added tax on small and medium-sized companies at the heart of the crisis, and generalizing the practice of revaluation to enable major traders and speculators to evade the due tax, and other violations.
2024-01-24 17:24:32
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