As fuel tax stalls, Lebanon hunts for new ways to pay military and security personnel

Report by Yazbek Wehbe, English adaptation by Akram Chehayeb

Before August 15, and possibly within a few days, Lebanon’s Ministry of Finance will pay the approved grant for July to both active and retired military and security personnel, once it receives the payroll lists from the army command and security institutions.

This grant, which amounts to approximately $30 million per month, was funded through the fuel tax approved by the government before the State Shura Council suspended its implementation a month after its approval.

An active-duty soldier will receive 14 million Lebanese lira, while a retiree will receive 12 million. The number of active military personnel stands at 120,000, with retirees totaling around 82,000.

The State Shura Council's decision canceled the tax, but the increase was not canceled. Therefore, the Ministry of Finance is facing a challenge in terms of securing alternative sources of funding to continue paying, and here lies the issue.

The Ministry of Finance has pledged not to spend a single lira without guaranteed revenue.

The ministry is committed to following the International Monetary Fund’s advice, fearing that any wrong decision could jeopardize the signing of an agreement with the IMF. But what funding sources are available?

Some propose increasing a specific tax on gasoline only, excluding diesel, especially since gasoline is not used by everyone. This tax hike does not require approval from parliament, but some MPs might oppose the measure.

Alternative solutions include improving tax collection, encouraging tax compliance, and boosting revenue from customs and coastal property, which could provide alternative funding sources.

The most important thing is to move away from relying on consumption taxes and instead adopt permanent and sustainable financing plans.