Lebanon’s revenue challenge: Can smarter policies replace new taxes?

Report by Theresia Rahme, English Adaptation by Karine Keuchkerian

Lebanon can increase its revenues without burdening citizens by raising fees on luxury goods such as imported tobacco and alcohol, strengthening taxation on coastal properties, combating smuggling to recover customs revenues — estimated at around $800 million lost to evasion — and by collecting actual taxes instead of relying on paper declarations.

This was emphasized by the National Economy, Trade, Industry, and Planning Committee, chaired by MP Farid Boustany, following its latest meeting. The committee stressed that the solution does not lie in new taxes but in smarter management of existing revenues.

Boustany said recent events are unacceptable and that authorities must take responsibility and define a clear course of action. 

If the Lebanese government reverses its recent decisions — including the 1% VAT increase and the LBP 300,000-per-barrel gasoline hike — other viable solutions could be implemented without harming purchasing power or fueling inflation.

He also stated that the committee does not support new taxes. Instead, it proposes improving the exchange rate to around LBP 60,000, which would increase purchasing power by roughly 30%. With the central bank holding around $8 billion, Boustany questioned why part of these funds cannot be used during a transitional phase.

The committee also said that recent financial decisions were made too quickly and that the economic file needs a more balanced and structured approach.

Ultimately, after all that is happening, the decision lies with parliament — will it approve the VAT increase and the LBP 300,000 gasoline hike?