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Lebanon Considers Higher Taxes to Boost Teachers’ Salaries

Oct. 18 (Bloomberg) -- Lebanon is considering tax increases to help pay for higher salaries for civil servants and public school teachers, who are calling for strikes.

The government is discussing options including raising value-added tax on imported cars to 15 percent from 10 percent, higher stamp fees for building permits, and increasing taxes on interest earned by bank deposits to 7 percent from 5 percent, Information Minister Walid Daouk said after a Cabinet meeting late yesterday. The higher deposit tax may apply to foreign-currency accounts only, Prime Minister Najib Mikati said today. The Cabinet is due to meet Oct. 31 for a final decision.

The government approved pay rises last month but said it can’t implement them until new sources of income are found. Many Lebanese schools were closed today in response to a call by the teachers’ union to strike, and other labor groups representing civil servants have urged similar actions.

The pay increases would need approval in parliament, where many lawmakers oppose them and have warned of risks to the economy. Lebanon is the Arab world’s most indebted nation, with debt equal to 134 percent of gross domestic product in 2011.

Mikati said at a press conference in Beirut that whatever steps the government takes won’t put Lebanon’s financial stability at risk.

To contact the reporters on this story: Donna Abu-Nasr in Beirut at dabunasr@bloomberg.net; Dana El Baltaji in Dubai at delbaltaji@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.

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