The Lebanese authorities Friday have suspended the implementation of the lump sum (fixed) tax in response to the appeals of the private sector. According to several TV stations, President Michel Aoun, caretaker Prime Minister Saad Hariri and caretaker Finance Minister Ali Hasan Khalil decided to freeze the implementation of the lump sum tax.
The private sector has urged the government to suspend or even cancel the lump sum tax because most businesses are not generating enough revenues to make ends meet.
The lump sum tax, which was supposed to generate $150 million a year for the government, is aimed at all businesses and private professions such as lawyers, doctors and accountants. The government was supposed to collect a fixed tax from each business or profession even if it did not generate good revenues.
The tax starts from LL250,000, depending on the size of business.
The lump sum tax was first introduced by former Prime Minister Salim al-Hoss in 2000 but was never implemented following a strong protest from private businesses. Khalil decided to activate this tax in a bid to boost government revenues.
In 2017, Hariri’s government increased taxes on profits, income and interest rates on deposits to cover the cost of the salary scale for civil servants, army and security personnel and public school teachers.
But many business leaders have warned that due to the slow GDP growth and the poor performance, the economy can no longer handle more tax burden.
Khalil recently formally submitted the 2019 draft budget to the Cabinet’s office.
But the bill will not be discussed until a new government is formed.
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