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UCC threatens intifada if wage hike not implemented

MPs attend the joint committees meeting at the Parliament in Beirut, Monday, April 7, 2014. (The Daily Star/Hasan Shaaban)

BEIRUT: The Union Coordination Committee Monday threatened to launch an intifada across the country if the salary scale was not approved, as MPs postponed discussions on ways to fund the wage increase to Tuesday.

“We warn members of Parliament that we will carry out an intifada [uprising] across the country this Wednesday if the salary scale is not implemented in full and without any tax that burdens the citizens,” Nehmeh Mahfouz, the head of the private school teachers union, told protesters who gathered near the Parliament building.

Mahfouz rejected the argument that increasing wages would widen the budget deficit and increase inflation, noting that successive governments had not been bothered by exceeding the budget ceiling by at least $6.6 billion each year.

He added that the UCC would hold an emergency meeting Tuesday to discuss the next step if Parliament stalled on the salary scale.

“We will show them [the MPs] what we can do. We will hold strikes and demonstration across the country Wednesday,” Mahfouz cautioned.

The warning came just minutes after the Budget and Finance Committee and Finance Minister Ali Hasan Khalil postponed the debate over funding the wage hike to Tuesday morning.

The MPs were deeply divided on ways to fund the salary scale, with some supporting a proposal to increase the value added tax while others preferred to cut waste in government departments.

A number of MPs told The Daily Star that the issue of the VAT was the major point of contention

Khalil proposed increasing the VAT from 10 to 12 percent across the board or raising it to 15 percent on certain luxury items.

But MP Ibrahim Kanaan, who heads the Budget and Finance Committee, rejected the proposal, saying it would fuel unrest in the country and also cause inflation to swell to alarming levels.

Kanaan believes that the best way to finance the salary scale would be to lift subsidies on electricity, cut waste and improve tax collection.

The MPs agreed in principle to lift the electricity subsidies but decided to delay the discussion of this issue until Tuesday.

Electricite du Liban’s deficit in 2013 reached $2 billion, the treasury’s third largest spending item.

However, lifting subsidies on the EDL would require a political consensus, as such a step would mean the government would be compelled to increase electricity tariffs for consumers and find less expensive ways to run power plants, which currently use costly fuel oil.

The committee approved several proposals, including the application of new fees for construction permits.

Kanaan told reporters that the committee approved 11 proposals to fund the salary scale but had postponed discussion on the VAT.

Central Bank Governor Riad Salameh, who attended part of the parliamentary debate, recommended that the salary scale be paid in installments over a five-year period.

But the UCC vehemently rejected Salameh’s proposal, insisting that the salary hike be paid in full.

The governor expressed fear that the salary hike could trigger inflation and raise the prices of commodities.

An adviser to the finance minister told The Daily Star that Khalil had proposed that the government end its financial support of nonfunctioning associations and NGOs, claiming this support was costing the treasury $600 million a year.

“All parties are benefiting from this financial support, and most of these associations are useless, and some of them are not giving anything back to the citizens,” the adviser said.

Citing an example, he said that treasury pays one of the societies LL500 million (over $300,000) for Arab horse breeding.

“This breeding center, which is owned by an MP and current minister, has not operated for many years. This is a blatant example of waste.”

But he said such a “bold decision” should receive the backing of all the major political parties.

The adviser added that Khalil was also proposing fees be applied for vacant apartments that have already bought.

“There are many Lebanese who bought apartments and houses but they are not living in them. In most countries, governments charge certain fees for these vacant apartments. These fees are quite small and would not hurt the homeowners,” he said.

Among Khalil’s proposals were the removal of tax exemption for large companies and the adoption of taxes for constructed buildings.

 
A version of this article appeared in the print edition of The Daily Star on April 08, 2014, on page 1.

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Summary

The Union Coordination Committee Monday threatened to launch an intifada across the country if the salary scale was not approved, as MPs postponed discussions on ways to fund the wage increase to Tuesday.

The MPs were deeply divided on ways to fund the salary scale, with some supporting a proposal to increase the value added tax while others preferred to cut waste in government departments.

Khalil proposed increasing the VAT from 10 to 12 percent across the board or raising it to 15 percent on certain luxury items.

Kanaan told reporters that the committee approved 11 proposals to fund the salary scale but had postponed discussion on the VAT.

Central Bank Governor Riad Salameh, who attended part of the parliamentary debate, recommended that the salary scale be paid in installments over a five-year period.

But the UCC vehemently rejected Salameh's proposal, insisting that the salary hike be paid in full.


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