Wage increases, new taxes trigger protests in Lebanon
Beirut - Lebanon’s leaders are looking into ways to produce the country’s first budget in more than a decade and approve pending salary increases for the public sector’s civil and military personnel. The cabinet has so far failed to formulate a budget for 2017 because of disagreement over how to clear public expenditures. Parliament, in the meantime, has stopped debating the pay rises, which have been dragging on for four years, after citizens took to the streets to protest the taxes proposed to finance them.
Although political disputes, which hindered the production of a budget since 2005, seem to have eased with the election of President Michel Aoun and appointment of Prime Minister Saad Hariri, the cabinet is still finding it hard to sort some things out, a government source said.
“All ministers agree that spending since 2005 should be cleared before a new budget is sent to parliament, according to laws governing public spending, but the whole thing is a mess that needs time to be cleaned up,” the source noted.
The parliament’s term, extended twice into a full four-year tenure due to politicians’ failure to agree to a new election law, will expire in June.
“The cabinet and later parliament need to get busy preparing a new election law that is acceptable to all influential parties, and if preparations for a new election law are under way, it is possible that both the budget and the raises are put on hold,” the source said. “The raises will most likely be included in the budget to make decisions concerning revenues and expenditures easier.”
Approving the budget before clearing government expenditures made without a budget “is like selling the bear’s skin before killing it”, said Amin Saleh, an independent economist. “Clearance, which is necessary to tell how much the government spent before it plans future expenditures, is not merely technical; it also has political, constitutional and legal dimensions.”
Some parties, including Aoun’s Free Patriotic Movement, call for revising clearances since 1992, when Hariri’s late father, Rafiq, assumed the prime ministry and launched his costly postwar reconstruction plans.
Saleh suggested including the pay increases in the budget.
According to Finance Minister Ali Hassan Khalil’s, Lebanon’s banks once suggested contributing $1 billion to the treasury instead of paying higher taxes. The banks denied the claim, which Saleh said would amount to an attempt to bribe the government if true.
Parliament stopped debating the public sector’s rises when protesters against proposed tax hikes took to the streets. Demonstrators in central Beirut hurled empty water bottles at Hariri when he tried to calm people rallying against proposed tax hikes. Carrying placards and banners, about 2,000 people flooded Riad Al Solh Square to protest against tax hikes that parliament is considering to fund public sector pay rises. “The road will be long… and we will be by your side and will fight corruption,” Hariri vowed. But protesters shouted “thief” and threw plastic bottles at the premier, who left soon after.
Saleh said protesters were justified in calling for investigations into reported government corruption, but urged them to come up with specific proposals on how to finance the pay increases without more taxes. “The same applies to public school teachers who threaten to strike if they do not get the raises they want,” Saleh said. “Where are the tangible proposals of unions of teachers and other public sector employees with grievances?”
Rayya Hassan, a former finance minister and politburo member of Hariri’s Future Movement, believes that both the cabinet and parliament are back to the drawing board on how to manage the budget and salaries.
“The protesters made a big gain: A promise to reconsider the proposed taxes,” she said about Hariri’s statement in the square. “Personally, I do not believe in any public spending without enough revenues and curbing corruption… If the raises are passed outside the budget, we will get into a vicious circle. We need a fair and balanced taxation policy inside the budget.”
Anger at Lebanon’s government has fueled repeated protests in central Beirut over the last two years, particularly in the summer of 2015, when politicians failed to agree on a solution to a trash disposal crisis. Piles of garbage festered in the streets, prompting an unprecedented stream of independently mobilised protests. Previously, all major protests had been organised through the big sectarian parties that dominate Lebanese politics.