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Strikes suspended after Cabinet ratifies wage hike

Higher VAT taxes will be applied on new and used imported cars.

BEIRUT: The Union Coordination Committee said Friday it would suspend open-ended strikes across the country after Cabinet agreed to pass the controversial salary scale bill to the Parliament as Finance Minister Mohammad Safadi criticized the manner in which the bill was approved.

The head of the public school teachers union Hanna Gharib told The Daily Star the UCC would suspend the strikes until further notice but stressed that civil servants and public school teachers would continue to hold sit-ins in order to ensure that Parliament receives the bill.

“This day [the endorsement of the bill] is a great day for all the labor unions in Lebanon. The bill was passed on Mother’s Day. This proves that labor unions can compel all governments to listen to the people’s demands. The days of complacent and weak labor unions in Lebanon are long gone,” Gharib told The Daily Star over the telephone.

But Safadi feared that the hasty step taken by the government could cause inflation to soar and the budget deficit to widen.

“I was the first to raise the issue of the salary scale and made a series of proposals to fund the wage hike in order to create a balance between different sectors. However, the bill which was adopted by Cabinet will disrupt this balance,” the minister said in a statement sent to the media.

Safadi added that he had raised a number of questions with the ministers which they failed to answer.

“How can we draw qualified individuals to top government posts without raising the salaries? What will be the fate of the 32,000 contractual and part-time employees in different public departments who were not mentioned in the bill?” the minister asked.

He added that the budget deficit at the end of 2013 would rise by LL1.5 trillion ($1 billion), noting that the tuitions of private schools would also increase if teachers received substantial raises before the end of this year.

“When Parliament approves the wage increase bill then the Finance Ministry will be compelled to adjust the budget figures to ensure funds for the income hike. This means the deficit will swell by LL1.5 trillion at the end of this year,” Safadi explained.

The head of the Beirut Chambers of Commerce described the endorsement of the salary increase as a “black day” in the history of Lebanon.

“This is a black day for the Lebanese economy. The government has willingly and deliberately decided to wreak havoc on the Lebanese economy,” Mohammed Choucair said in a statement. He urged the Parliament to reject the bill in order to save the Lebanese economy.

Choucair added that the bill had been passed at a time when job opportunities had fallen by 4 percent and GDP growth stood at 1.5 percent at the end of 2012.

Choucair said that many ministers who attended Thursday’s session supported the views of the private sector and felt that the time was not ripe to raise the salaries of civil servants and school teachers in these delicate times.

The Cabinet agreed to raise the value added tax on the imports of mobile phones and their accessories as well as shrimp, caviar and salmon.

The VAT will also be applied on the import of new and used cars as well as their accessories.

The VAT increase is supposed to ensure LL150 billion in additional revenue to the treasury.

Cabinet also agreed to reduce the value of VAT reimbursement for tourists by 20 percent and this would secure an income of LL5 billion.

The fiscal stamp fee will also rise from LL3,000 to LL4,000 and the fiscal stamp fee on phone bills will rise by LL1,500.

The 15-percent value added tax will also be applied on luxury consumer goods, which include imported alcoholic beverages.

A 15-percent tax will also be applied on the profits of sold properties.

The Cabinet also proposed other taxes to finance the salary scale bill.

Gharib slammed the taxes in the bill and warned that the working class refused to burden low-income families so that the government secures revenues to finance the wage increase.

He also rejected the clause in the bill which calls for increasing the working hours for civil servants by three more hours every day.

But many experts doubt these measures will be enough to finance the wage increase, which will cost the treasury $1.2 billion in the first year.

 
A version of this article appeared in the print edition of The Daily Star on March 23, 2013, on page 4.

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