16.7 C
Qādiān
Sunday, February 9, 2025

Reshaping Perspectives and Catalyzing Diplomatic Evolution

After having increased it 6 times.. What are the risks of increasing the VAT dollar in Lebanon?

The Lebanese government recently issued a decree to increase the price of the dollar, on the basis of which VAT is collected, from 15,000 pounds per dollar to the price approved on an exchange platform, which currently stands at around 87,000. Lebanese pounds. , an increase of nearly six times, which will result Expensive related to the prices of various goods and services.

The Lebanese government’s move comes in a bid to secure additional revenue, allowing it to secure new revenue to fund the wage increases and transport allowances for public sector employees, which it approved last month. .

Inflation is 263 percent

At present, the consumer price index in Lebanon continues to rise, as figures released by the Lebanese Central Administration of Statistics showed that the consumer price index in the country in March 2023 increased by 263% compared to March 2022.

This significant increase in consumer prices comes, driven by high inflation rates, resulting from the continued collapse of the Lebanese pound, whose exchange rate has fallen on the black market from levels of 24,000 pounds to the dollar. in March 2022, to a level exceeding 108 pounds to the dollar in March 2023, which produced a situation Continuous increase in commodity prices, accompanied by a decline in purchasing power, so that the decision to increase the price of the dollar value added tax calculation of 15 thousand pounds per dollar, at the approved price of an exchange platform, which currently amounts to approximately 87,000 Lebanese pounds.

Rising cost of living and worsening poverty

Journalist specializing in economic affairs, Alphonse Dib, said in an interview with “Sky News Arabia Economy” that the question of the increase in the price of the dollar, on the basis of which VAT is collected, has two angles. that the State needs income, especially since all of its previous income does not constitute 15% of its expenditure needs, while the second angle concerns the impact of the prices of consumption and services, which will lead to an increase in the overall cost of living in view of the disastrous economic and living situation in which Lebanon has been living for the past four years, so that the new decision reflects an expansion of the multifaceted poverty from which the country suffers .

Big stakes for the decision

Deeb explains that the increase in the price of the VAT tax dollar has great caveats and great risks, because the most dangerous thing is that countries, during economic crises, do not resort to increasing the cost in this way without rescue measures, including social support and protection programs, stressing that in light of the collapse and disintegration of Lebanese state institutions, the new decision will reflect more smuggling and the tax evasion, and will lead to the expansion of the illegal economy to the detriment of the legal economy, which currently accounts for 50% of the Lebanese economy.

More parts printing

According to Deeb, from the state’s point of view, the decision to increase the price of VAT dollars will help collect more revenue for the benefit of the public treasury, at a time that excludes many players in the Lebanese economy, that this decision achieves what the state aspires to, indicating that the excessive increases in subsidies and offers to government public sector employees are not commensurate with its capabilities, and will once again push the state to resort to the Banque du Liban to print the national currency to cover the lack of income, and to meet the increase in expenses, especially those resulting from the increase in salaries, which has occurred in the past.

No offers without reforms

Deeb stressed that there should be no additional offers from the state without carrying out reforms and taking steps to achieve economic growth. Raising wages and pensions in a way that exceeds the resistance of the national economy will inevitably lead to the printing of foreign currency and the increase and acceleration of inflation, making these increases unnecessary.

Payroll financing from $35 million to $120 million per month

For his part, a member of the Economic and Social Council, Adnan Rammal, said in an interview with “Economy Sky News Arabia”, that the recent decision concerns the increase in the price of the VAT dollar from 15 thousand pounds to around 87 thousand pounds, is to cover the cost of funding the public sector wage increase, which was recently approved by the Lebanese government, whose allocations have quadrupled from $35 million per month to $120 million per month , indicating that this decision could result in another decision in the next few hours, linked to the increase in the price of the customs dollar from 60,000 pounds to 87,000 pounds, and this is what will be reflected in one way or another. another on consumer prices in Lebanon.

10% increase on goods and services

Rimmal estimated that increasing the value-added tax dollar price by six times means that the increase can vary between 8 and 10% of the minimum price of the merchandise, because this measure can improve the company’s finances. Lebanese State, but it raises concerns. on the expansion of tax evasion, highlighting until 50% of the Lebanese economy has become “unregistered”, that is to say, it operates without being declared, and that no royalties nor tax is levied on it at the expense of the state and legitimate institutions, and from this it can be said that the increase in the VAT dollar will deal a blow to the economy and to legal and duly registered businesses, And this will push for an increase in evasion operations, so that the state finds itself facing a shortfall in earning revenue, coming back and resorting to printing money to cover its expenses.

Read the Latest World News Today on The Eastern Herald.

More

Follow The Eastern Herald on Google News. Show your support if you like our work.

Author

Arab Desk
Arab Desk
The Eastern Herald’s Arab Desk validates the stories published under this byline. That includes editorials, news stories, letters to the editor, and multimedia features on easternherald.com.

Editor's Picks

Trending Stories

Laurita Fernandez poses totally nude on her back in her Instagram

Laurita Fernandez is one of the most talented dancers...

Israel on high alert for potential Tsunami following Santorini earthquakes

Israeli authorities have issued precautionary measures following a series...

Prostitution in Dubai: Understanding the Dark Side of the City

Dubai, a city celebrated for its lavish shopping experiences,...