Cabinet to study new coastal land taxes

Cabinet will study new set of tax proposals on coastal properties. (The Daily Star/Dalati Nohra, HO)

BEIRUT: The Cabinet is expected to discuss Wednesday a government decree which proposes taxes on every meter of property that was constructed on or near state-owned lands along the coast, a move seen as important to raising revenues to feed the treasury.

If the decree is approved by the government, this will mark the first time that the Lebanese authorities take the bold move of taxing individuals and companies that built hotels and sea resorts illegally during the war period on seaside land which belongs to the state.

The ministers will review three lists of proposed tables submitted separately by the Finance Ministry, the Public Works and Transport Ministry and a third list based on a 1992 decree submitted by previous governments but was never endorsed.

The proposals by the Finance Ministry and the Public Works and Transport Ministry have totally revised the 1992 decree to be in line with the current property market prices.

In the past, many finance ministers have tried in vain to pass taxes on illegal properties along the coast but their efforts were blocked by politicians and powerful resort owners.

It is not clear how much the government can generate from these types of taxes.

Some economists say that the authorities can collect as much as $150 to $200 million a year. However, they agree that this sum is still not enough to make up for the huge additional allocations for the salary increase.

The government said it would hold another meeting soon to approve the salary scale for government employees, which will cost the treasury close to $1.2 billion a year.

Prime Minister Najib Mikati has seemed reluctant to raise taxes substantially at the moment, as this could trigger protests among the labor unions and the private sector.

Mikati wants the ministers to compare the three lists of proposals and will emphasize the need to pass these taxes to generate revenues for the treasury.

The proposals of both the Finance Ministry and the Public Works and Transport Ministry are close, and vary greatly from the 1992 decree.

The proposals give a breakdown of built-up properties along the coast in every region.

The tax rates vary from one region and another.

For example, the 1992 offers a fee of LL15,000 per square meter in Akkar, while the Finance Ministry and the Public Works Ministry proposed a higher tax for the same area of LL40,000 per square meter.

In Beirut, the decree offers fees ranging from LL750,000 per square meter to LL1 million in the Solidere Marina area.

Those proposed by the Finance Ministry and the Public Works and Transport Ministry exceed LL9 million in the Solidere area.

There are no official figures on the state-owned lands that were seized by individuals and companies. But sources estimate the size of these properties in millions of square meters valued at billions of dollars.

It is not clear how the companies that built properties on government lands will react to this proposal.

In the past, the owners of sea resorts that were built on the coastline put up a vicious fight against government attempts to slap taxes on them, claiming that they had invested millions of dollars on these resorts and hotels.

A version of this article appeared in the print edition of The Daily Star on August 07, 2012, on page 5.




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