BEIRUT: Disagreements over the Finance Ministry’s 2012 budget allocations to the Industry Ministry and the delay in payment of VAT reimbursements erupted into a public war of words between the ministries Friday.

Industry Minister Vreij Sabounjian issued a statement blaming Finance Minister Mohammad Safadi for delays in paying VAT reimbursements to industrialists. Sabounjian also said that Safadi had not responded to various project proposals from the Industry Ministry in the last few months.

The minister’s statement followed an exchange of strongly worded messages last week in which the two ministries accused each other of mismanaging their respective departments.

“The finance minister decided to respond to the [VAT] projects through the media instead of responding directly to the ministry” Sabounjian said, adding that this violated “the fundamentals of official dealings between Lebanese ministries.”

Sabounjian said Safadi should have forwarded any funding projects that he himself did not support to the Cabinet. Instead, Safadi withheld projects’ details from Cabinet and modified them without prior consultation, he said.

He also said the funds allocated to his ministry by Safadi in the 2012 budget draft is far below what is allocated to other ministries.

Safadi said Wednesday the budget was still being studied by the Cabinet, adding that Sabounjan could contest the budget allocated to his ministry at relevant Cabinet sessions.

Safadi has repeatedly denied claims by Sabounjian that he plans to phase-out VAT refunds for industrialists.

“The Finance Ministry has decided to retain VAT refunds, in line with Sabounjian’s suggestion,” Safadi said.

He added that a proposed phasing out of income taxes on exporters – an idea advocated by the Industry Ministry– would be impossible to implement as this allow companies to evade taxes.

“Instead I suggest we scrap taxes for all industrialists, despite the higher costs,” Safadi said.