https://arab.news/m823z
Lebanon has a rare opportunity of restarting from scratch. The starting point is a failed state but with a strong society that is ready to rebuild after being damaged and bankrupted. The real challenge is not just economic recovery but also restoring confidence in the state itself. Every decision now is critical and will have consequences for the country’s future.
That is why the proposed gap law is so important. This recently drafted legislation aims to distribute the massive losses from Lebanon’s 2019 financial collapse between the state, central bank, commercial banks, and depositors, and allow depositors who have been frozen out of their savings to gradually recover their money. Generations of savings were wiped out in the collapse, and it is absurd to demand taxes from citizens whose savings the state has already swallowed. If the state can, as the gap law proposes, defer repayment of its debt over five to 10 years, it can also defer collecting taxes until it has honored its obligations and regained trust.
In any case, data from a 2003 study shows that the top 20 percent of households pays 77 percent of salary and wage taxes, and these are the ones more likely to have bank accounts and their savings trapped in them. That, combined with the inefficiency and costs of collecting taxes from the rest of the population, would make a good case for abolishing taxation altogether, at least for a limited time. In addition, a competitive corporation tax rate, say of 5 percent, would also attract many businesses back to the country.
