Gasoline tax approved, but questions remain over funding public wage increases

Report by Lea Fayad, English adaptation by Mariella Succar

Lebanon’s new gasoline tax is now in effect, and it is being paid daily. But questions remain over the fate of the proposed 1% increase in the value-added tax (VAT).

Although the VAT increase was ultimately dropped, concerns persist over how the government will finance the second half of the salary adjustments for the public sector, estimated at roughly $800 million annually. The gasoline tax is expected to generate about $400 million per year.

According to Finance Ministry sources, work is underway on a comprehensive tax reform plan based on measures that would target luxury goods rather than basic commodities, aiming to place the burden on higher-income groups rather than low-income households.

Additional steps under consideration include combating customs and tax evasion, regulating and reassessing fees for the use of public maritime and riverfront properties, and enforcing collection orders related to quarries and crushers.

Meanwhile, Finance Ministry sources expect gasoline revenues to decline by approximately $50 million annually following an agreement to provide public transport drivers with monthly gasoline vouchers worth 12 million Lebanese pounds (about $133) for vehicles running on gasoline. The measure is intended to prevent an increase in shared taxi fares and keep the fare fixed at 200,000 LBP.

The number of drivers registered with the National Social Security Fund is estimated at around 31,000. However, concerns remain over oversight and ensuring that the vouchers reach eligible drivers, particularly as some individuals registered as license holders do not actively practice the profession.