BEIRUT: Civil servants Monday urged the Parliament to expedite the endorsement of a proposed wage hike, as private sector bodies warned that tax increases to finance the new salary scale would have dire consequences on the economy.
Public sector staff announced that they would stage a general strike Wednesday, and threatened further action if the Parliament failed to endorse a salary scale proposal that has been submitted to a parliamentary joint committee.
“We will not approve of anything less than the salary scale plan submitted to the parliamentary joint committee, and public sector employees are planning to take escalatory measures if they fail to achieve their goals,” a representative of the public servants said during a news conference.
He said public sector employees were suffering from rising prices of basic commodities and increasing tuition fees.
Earlier in the day, President of the Beirut Traders Association Nicolas Chammas voiced opposition to proposed tax hikes that were being discussed by the parliamentary joint committee to finance the salary increase.
“Such a measure could have a catastrophic impact on the Lebanese economy,” he said.
“We are totally against financing the salary scale plan by increasing taxes because this will definitely impact various sectors of the economy – namely the real estate and trade sectors.”
Chammas said the real estate and trade sectors were already suffering from an economic slowdown and warned that the proposed step would put an additional burden on the private sector.
Finance Minister Ali Hasan Khalil is planning to introduce new taxes in his 2014 draft budget in order to finance the salary scale, which is expected to cost the government more than $1.6 billion annually.
Several lawmakers have echoed the private sector’s concerns and voiced reservations over Khalil’s proposed increases in customs fees and VAT.
For instance, increasing customs fees on imported clothing from 5 percent to 15 percent and shoes from 10 percent to 20 percent would only contribute to a further slowdown in trade activity, Chammas said.
“The increase in customs fees is even more damaging than the increase in the value-added tax because customs fees cannot be reclaimed as is the case with VAT,” Chammas argued.
Chammas added that the government should consider cutting expenditure rather than focusing on increasing taxes to finance the salary scale.
“The proper way to do so is by minimizing expenditures while increasing revenues. Rather than increase taxes, it would be more logical to fight corruption and tax evasion,” he said.
Chammas also warned that an increase in the salaries of civil servants would prompt private sector employees to demand a similar wage hike.
“This will lead to the deterioration of what is left of the national economy,” he said.
According to the proposed new salary scale, grade-one civil servants would earn a LL200,000 increase, raising their wage to LL4,900,000 while grade-two employees would earn an additional LL150,000 putting their wage at LL3,000,000.
Grade-three employees would make an additional LL100,000, raising their monthly salary to LL2,450,000.