THE SMUGGLERS’ CLOUT
The first requirement is to address governmental
waste and corruption. It is not permissible for the
124 smuggling crossings along the Lebanese-Syrian
border to blatantly operate at full capacity, and in
both directions, right under the government’s nose.
The Treasury is losing potential revenues because the
smuggling of goods from Syria to Lebanon does not
allow the State to collect the customs duties on these
goods. The import of merchandise through the ports
of Lebanon in transit to Syria drains BDL’s foreign
exchange reserves and violates UN resolutions that
impose a ban on the Syrian regime. In addition, we
should not forget about the containers that are being
unloaded in some Syrian ports and then transported to
the warehouses of traders in Lebanon by entities that
enjoy political protection. These entities charge $10,000
for transporting each container regardless of the value
or category of cargo loaded in the container. These
practices result in the loss of potential fees for Lebanese
ports and once again the Treasury loses potential
customs duties in addition to the value added tax (VAT).
FISCAL LEAKS
The second requirement for maintaining monetary
stability is that the State must collect its rightful
resources, resources that are being plundered and doled
out to many of those who are in power and to those
wielding de facto power on the ground. We identified
the channels and areas of this resource leakage in the
working paper prepared by the Study Committee of the
Association of Banks. The overall value of the leakage
is over $4 billion. This is due to gross negligence in the
collection of taxes and fees, and the weakening transfers
of revenues from the ports and other public facilities to
the Treasury (including telecommunication operators,
the Port, the Airport, and Middle East Airlines...) The
waste at Electricité du Liban (EDL) must unequivocally
be added to this leakage. We hope it will be curtailed by
the recently approved plan.
TAX ON INTEREST INCOME
Lebanon’s income tax revenues would have declined by
20 percent in 2018 compared to 2017 if we exclude the
tax on interest income levied by the banks on behalf of
the Treasury and the interest tax on bank placement
in Lebanese Treasury bills and with BDL. This is
demonstrated by the increase in the share of the interest
tax to 40 percent of total income tax in 2018 from 20
percent in 2017, according to the Ministry of Finance.
TIME IS MONEY
The third requirement to buttress monetary stability
consists of stopping the worsening of the political
problems in the country. The ongoing political tensions
that are being unceasingly spawned result in more
wasting of time and cause more harm to the country
than pressing external factors. The political powers do
not have a sense of the importance of time while the
time factor has become now more critical than in any
other period of our modern history. We waste our time
when we delay launching the public investment program
presented by the government at the CEDRE Conference!
We waste precious time when we are sluggish in
launching the offshore exploration and extraction of oil
and gas! We take too much time to form cabinets and to
prepare ministerial statements! And we waste time by
obstructing the meetings of the Cabinet whose motto
is ‘Let’s Get to Work’! We waste time and money when
citizens have to undertake all sorts of formalities in
most, if not all, departments and ministries. We waste
time when we are reforming public institutions and
when we try to make them more productive for narrow
and shortsighted considerations. Sometimes we waste
time for a reason and sometimes for no reason at all!
In a nutshell, we waste time in the present fast-paced
era when saving time is crucial! Time has a price, ladies
and gentlemen!UNDERPERFORMANCE
As a result of low efficiency, or a lack of it, in the public
sector, wasting time adds a significant cost to the scale
of government waste and corruption. Unfortunately,
while we are wasting our time, we do not notice the
reluctance of our youth and daughters to enter the
local labor market. I am concerned that this could
represent a gradual loss of hope in the country due to
the mismanagement at the level of the State and of those
in charge of it. The lack of these prerequisites makes
the cost of monetary stability seem high. Some people
attribute this, somehow correctly, to our rent-seeking
economy. Actually, it could also be attributed to the fact
that the State does not exercise its full authority and that
it is not efficient, despite the escalation of its spending
and the enormous human resources it employs.LEBANON OPPORTUNITIES, AUGUST 2019 25
Those who
think that
monetary
stability
might beshaken are
mistaken
The interest spread is considered high compared to historical levels