Lebanese president gives nod to tax, wage increase

BEIRUT / Reuters

Lebanon’s president signed off on public sector pay rises and tax hikes, a move that has triggered business concerns but could help politicians shore up support ahead of a legislative election next year. President Michel Aoun held off ratifying the two laws since parliament approved them last month, amid objections from businesses about impact of more taxes on Lebanon’s fragile economy. Finance Minister Ali Hassan Khalil, a proponent of the legislation, told Reuters it would “reflect positively on social stability”.
The salary scale would cost an estimated 1.38 trillion Lebanese pounds ($917 million), while the tax hikes would bring in revenue of 1.65 trillion pounds ($1.1 billion), he said. But Nassib Ghobril, chief economist at Byblos Bank, said it was difficult to gauge the cost, particularly since “we don’t know how many employees there are in the public sector”.
“Nobody knows,” he said. “It’s difficult to put a real, credible figure on the cost of the public sector salary scale.” Ghobril said the public sector needed “fundamental and in-depth reforms” before salary increases. His comments reflect wider concern among some economists that a tax increase will slow growth without offsetting dent in public finances caused by salary rise.