by Dana Halawi
BEIRUT, May 29 (Xinhua) -- The 2019 state budget, which was approved by the Lebanese government earlier this week, should focus less on imposing taxes, a Lebanese expert said.
Nassib Ghobril, head of the economic research department at Byblos Bank, described the approval as a good effort to reduce the deficit from 11.4 percent of GDP to 7.59 percent, as the 2019 budget heavily relies on tax increases instead of cutting spending.
The 2019 budget raised the tax on the interest of the bank deposits from 7 percent to 10 percent. The tax rate also applies to the interest income earned from Treasury bills and bonds issued by the government.
However, the increase in tax will lead depositors to put pressure on banks to offset the tax hike by raising the interest rates on their deposits, said Ghobril.
The budget also witnessed a hike of the income tax rate on persons and some types of companies to 25 percent, which will generate an annual income of 225 million Lebanese pounds (148,000 U.S. dollars).
In addition, three percent of the retirement salary of army personnel will be deducted to be used for healthcare and social assistance.
In the view of Ghobril, measures such as fighting tax evasion, improving fee collection and controlling the borders against smuggling should have been given priority over imposing new taxes.
In addition, the government should have also forced the full implementation of anti-smoking law, road safety law and intellectual property rights law, he said.
Around 45 percent of cars in Lebanon do not pay their mechanics fees annually while unpaid bills from public institutions such as councils, funds and ministries have totalled an equivalent of 1.2 billion dollars.
"If all these measures were approved, a remarkable amount of revenues would have been collected," the Lebanese economist explained.
Notably, endorsing a state budget that slashes the deficit is among the measures that the Lebanese government has pledged to take as part of the key financial and economic reforms recommended at the CEDRE Conference organized by France last year.
