BEIRUT: Lebanon’s finance minister defended on Tuesday his government’s decision to raise taxes to finance a hike in public sector wages, which sparked an outcry from a major union and a protest that briefly blocked a Beirut artery.
The cabinet’s decision the day before aimed to increase by sixfold rock-bottom wages and pension payments for hundreds of thousands of civil servants and retirees in a country still reeling from a devastating economic crisis that started in 2019.
In addition to the crisis, Lebanon is also suffering the aftereffects of a recent war between Iran-backed Hezbollah and Israel, with the international community conditioning aid on public reforms.
The new decision raises the value-added tax (VAT) to 12 percent, from 11 percent before, and adds 300,000 Lebanese pounds (around $3.30) per 20-liter can of gasoline.
Finance Minister Yassin Jaber said in a press conference on Tuesday that the wage hike would cost the state $620 million, hence the decision to raise taxes was made to “preserve financial balance, because any imbalance would lead us to a crisis.”
