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Profits of Lebanese banks could drop if Parliament approves a proposal to tax lenders' income from assets tied to sovereign bonds, FFA Private Bank said.Finance Minister Ali Hasan Khalil has proposed raising taxes on interest on customer deposits from 5 percent to 7 percent and applying a similar tax on banks' investments in sovereign bonds.This proposal has infuriated the banking sector, with banks warning that they may be compelled to raise the interest rates on personal and housing loans to make up for the drop in profits.The advocates of this tax argue that the profits of the banking sector would only fall by $146 million each year, noting that the net profits of the lenders in 2013 were $1.7 billion.
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