BEIRUT: Cabinet is set to approve a new tax law this week that would increase the value added tax by an average of two percentage points, according to ministerial sources.
During the Cabinet session scheduled for Thursday at the Baabda Palace, ministers are expected to debate a proposal by Finance Minister Mohammad Safadi to reform the country’s 12-year-old tax law and to reach an agreement on a source of funding for a new salary scale for public sector employees.
The Union Coordination Committee, which represents teachers and public sectors employees and has been at loggerheads with the government for months over the adoption of a new salary scale, postponed a demonstration that was scheduled for Wednesday to next week in anticipation of Cabinet reaching an agreement.
While proposals for tax increases have been met with strong opposition from the government, a number of amendments to the tax law presented by Safadi is on top of the Cabinet’s agenda for Thursday.
According to Safadi’s proposal, the average VAT would increase from 10 percent to 12 percent. The 10 percent VAT was passed in Law 379 of 2001 and the law has not been amended since.
In recent months, Mikati, who has strongly objected to any increase to the VAT, has said that the failure to refer the approved salary scale to Parliament was due to the lack of resources and the necessary funds to increase salaries.
But the Cabinet has been left with few choices amid the increasing pressure from the public sector and demonstrations organized by the UCC.
In a statement Monday, the UCC called for a nationwide strike next week and a rally toward the Grand Serail. “We will observe a strike Wednesday, Jan. 23 and the rally will start at 11:30 a.m. from the Information Ministry in Hamra to the Grand Serail,” said the UCC.
The UCC also said that it would hold a three-day strike in the first week of February if the government continues to neglect the public sectors’ demands for a new salary scale.
Another proposal that will be on the Cabinet’s agenda Thursday is a request for additional funds by the Interior Ministry for its preparations for the upcoming parliamentary elections.
The proposal made by Interior Minister Marwan Charbel calls for appropriating $400,000 from the state’s budget to the ministry.
“This year’s election will see the participation of Lebanese expatriates for the first time, requiring additional work and preparations,” says the ministry.
According to the proposal, voter registration in embassies and consulates around the world will increase the pressure on the Interior Ministry, which is responsible in organizing the elections.
The proposal also says that the funds are necessary to comply with the increasing number of requests for national identification cards ahead of the elections.
Although no official date has been set for the elections and lawmakers have yet to agree on a new electoral law, demand for identification cards necessary for voting on election day increases months before parliamentary elections.
The Cabinet will also discuss a proposal by the Interior Ministry to allow vehicle owners to apply for a license to tint their cars’ windows.
“A car owner who is 25 years old and above and has a health condition that might be affected by the sun is eligible to apply for a license,” the ministry says.
A license for partial tinting would cost the car owner LL750,000 and LL1.5 million for full-tinted windows.
MPs, diplomats, members of the judiciary, leaders of religious institutions and political parties are exempted from the yearly charge for the license.