Lebanon slashes import duties in bid to revive economy
The new Lebanese government of Prime Minister Rafiq Hariri decided Wednesday to slash import duties in a bid to revive a flagging economy, Information Minister Ghazi Aridi said. From Friday, taxes on most imports will now range from zero to 70 percent instead of six to 105 percent, Aridi said after the weekly cabinet meeting.
Finance Minister Fuad Siniora told reporters that the set of liberalization measures was designed to "help revive the economy" which has been in crisis since 1998. "In helping the revival through a growth policy," the government formed by Hariri on October 26 "sought to help Lebanon to bring back visitors and tourists and revive it as a trade center for the region," the minister added.
"These measures, inaugurated with the 'open-sky' policy, are the realization of commitments taken by the government in its statement on general policy," Siniora said. Since November 8, Hariri's government has allowed airlines to transport products and passengers through Beirut airport without limitations, quotas or other constraints.
Hariri, a multi-billionaire who was premier in the 1990s, told AFP on November 11 that he wanted to negotiate an association agreement with the European Union and eventually win Lebanon's membership in the World Trade Organization. Both goals require a reduction of import duties.
Under the new rules distributed to the media, no duties will be placed on raw materials for industry and on information technology products, which are seen as important in developing a modern economy. Consumer goods will see a sharp drop, with taxes on beauty products and cosmetics falling from 55 percent to 15 percent. Table salt will see a parallel drop in duties.
The government will continue to protect local industry, although not with the same tariff barriers as in the past, with the ceiling at 70 percent rather than 105 percent. For example, alcoholic beverages will be taxed at 15 percent, except in those areas where Lebanon produces its own brands, such as beer, wine and arak (anisette). Beer imports will face 40 percent duties, for example.
On goods not destined for industry that had a six percent tax or more, rates will drop to five percent, except on tobacco, cement, and private cars, which provide the government its main source of revenues for the budget.
Around half of the state's revenues were drawn from customs duties, with income tax and corporate taxes notoriously low. "The Treasury will lose a little at the beginning, but our main concern is to revive the economy," Siniora said. "A growth rather than a stagnant economy can benefit the treasury." The minister added that the value added tax will be studied in 2001 as a potential source of state revenue. — (AFP, Beirut)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)