New taxes and fees: Lebanon's 2024 budget shifts to dollar payments

For the first time in its history, Lebanon's 2024 budget, currently under discussion in the cabinet, is abandoning the local currency and moving towards collecting various fees and taxes in dollars. This shift has raised concerns among citizens as it may lead to additional price hikes for various goods if the dollar exchange rate rises against the Lebanese lira.

The main changes in the budget include:

-         Customs fees will now be collected in US dollars, compared to the previous use of the exchange rate. This could result in higher prices for many consumer goods if the dollar appreciates against the lira.

-         All port and airport fees in the 2024 budget will be denominated in dollars, including departure fees for travelers by sea and air.

-         The fees collected by the Electricité du Liban (EDL) become in dollars after being at the exchange rate plus 20 percent, including invoices.

-         Residence fees for work permit holders of all categories will also be converted to dollars.

-         The petroleum sector, which has long been a dream, will now be subject to fees payable in dollars, including the state's share of this sector.

In addition to these dollar-based changes, the 2024 budget introduces several new taxes and updates to existing ones, including:

-         Increasing the value-added tax (VAT) from 11 to 12 percent.

-         Introducing a fee for expedited services means having citizens pay extra for faster government transactions.

-         Imposing fees for solid waste collection services, additional fees on transactions with the Education Ministry, and increases in real estate transaction fees, among others.

The Finance Ministry aims to use these measures to repair the state's treasury and its financing capacity, particularly for paying public sector salaries, following the BDL's decision to suspend its funding.  

However, the government is using the easy way out. Critics argue that these measures place a heavier burden on citizens instead of implementing essential reforms that secure revenue, such as combatting tax evasion and smuggling or eliminating fictitious public sector jobs.

How can Lebanon's economy recover under these circumstances?