A
- Advertising Agencies
- Architects


B
- Banks


C
- Car Dealers
- Car Rental
- Casinos
- Commerce
- Consulting
- Cosmetology
- Craft


D
- Data Processing &
Computer Systems
- Decoration &
Furnishing


E
- Editing
- Elementary Schools
- Engineering &
Contracting
- Environment / Waste
Management Services
- Express Delivery


F
- Fashion
- Financial Services
- Food & Beverage
- Furnished Apartments


H
- Health / Beauty
- Higher & Vocational
Training
- Home Appliances
- Hotels 3
- Hotels 4(A)
- Hotels 4(B)
- Hotels 5
- Hotel & Restaurant
Amenities


I
- Industry
- Insurance
- Interior Design /
Decoration
- Internet


J
- Jewelleries


L
- Lighting
- Luxury


M
- Media
- Music


O
- Office Equipment /
Electronics
- Oriental Carpets
- Outside Decoration


P
- Printing
- Promotional Materials


R
- Real Estate
- Recruitment
- Restaurants


S
- Sanitary Wares
- Security
- Services
- Sweets


T
- Taxi
- Telecommunication &
Mobile Phones
- Transport
- Travel Agencies
- Technical Studies


W
- Watches
- Water Treatment










 


 

Back to archives Back to news
French Version


Bankers warn against raising tax on interest

Move can damage economy as depositors take funds elsewhere

Raising taxes on interest rates on bank deposits may force the migration of funds and capitals from Lebanon, leading bankers warned on Friday. "This is a very dangerous proposal by the government.

Banks are the main pillar of the local economy and this step would certainly cause serious damage to the sector," Adnan Kassar, chairman of Fransabank told The Daily Star.

According to a draft proposal, which is yet to be discussed and approved by the Cabinet and the Parliament, taxes on interest rates on bank deposits should rise from 5 percent to 8 percent.

The government of Premier Fouad Siniora, under pressure from the donor states to submit an effective economic plan as a prelude for financial assistance, will face an uphill struggle to sell his bold program not only to the Cabinet members but to the disillusioned private sector.

Banks deposits, which currently stand at $62 billion, stand at three times the size of Lebanon's GDP.

Lebanese banks succeeded to lure large funds from Lebanese and Arab investors over the past 10 years thanks to the high return on dollar and Lebanese pound deposits, free transfer of funds and a cherished banking secrecy law.

"We warned Siniora when he was a finance minister not to slap a 5 percent tax on bank deposits but unfortunately he did not heed our advice," Kassar said.

Every time the government needed money to increase state revenues they resort to the easiest way: "Raising taxes," he said.

"We keep telling them that raising taxes without serious reforms will not solve the public debt problem. The government must first cut waste in public departments and combat corruption," Kassar said.

Kassar and other bankers said that Lebanon is loosing its competitive edge because the interest rates offered by local banks are no longer appealing because many countries in the region such as Cyprus are offering similar rates.

They added that the LIBOR, London Inter-bank Offered Rate, has risen from one percent to nearly 5 percent which means that Lebanese banks' margin to increase interest rates on bank deposits is becoming very costly.

One banker said that depositors may start putting their money in Cyprus. "Why should they pay 8 percent interest on bank deposits while in Cyprus they don't have to pay any tax?"

Shadi Karam, chairman of BLC Bank, said the proposal to raise the tax is a major mistake by the government. "The entire economy is one-third of the banking sector. Banks are the driving engine behind the limited growth and job opportunities in the country."

He added that if the government proceeded with the tax proposal then "they are trying to kill the goose that lays the golden egg."

"If this erroneous decision was adopted to implement real reforms then I will reluctantly accept it. However, if this step will lead to more corruption and waste then I don't think it is the right decision."

He added that the tax will also be applied to non-Lebanese residents and this is quite dangerous.

It is widely believed that non-Lebanese hold as much as 20 percent of total bank deposits in Lebanon.

Other bankers also said that if funds left the country then the banks will not be able to finance the $38 billion public debt in medium and long terms.

Local banks hold most of the government's treasury bills and Eurobonds, increasing their risk exposure.

"Nonresidents in Switzerland do not pay any taxes on interest on deposits. But it seems that the Lebanese government wants to break the rule," one banker said.

Beirut 27-03-2006
Osama Habib
The Daily Star



BUSINESS
INFORMATION
Business News
Business Forum
Business Opportunities
Fairs & Exhibitions
Useful Addresses
Currency Exchange Rates
Context
GENERAL
INFORMATION
Geography
Some Marks
To see in Lebanon
FIRST LEBANON
INFORMATION
Media of 1stlebanon
Impact of 1stlebanon
Add your company
Press Book
WEBSITE SELECTION
Flowers delivery Lebanon
Flowers delivery Dubai
Oriental food specialty
Lebanese wine
Real estate agency Beirut
Hotel Hamra-Beirut
Car rental
Beirut-Lebanon
Rent a car lebanon
Reservation for your travel in Lebanon
Association des français de l'étranger
-section Liban
Diamond jewelry Lebanon
Jewelry manufacturer Lebanon
Jewelry watches-Swiss made watches
Diamond Swiss watches
Modern and comtemporary jewelry
Byzantine & Phoenician jewelry
Jewelry creation
Oriental, classical and traditional decoration
Hand made furniture
Construction management Lebanon
Projects development
Shoes manufacturer and distributor Lebanon
Sole agent of Philips & Whirlpool in Lebanon
Web development
Web marketing
Printing press services
Paper products
Insurance company Lebanon
Insurance Lebanon
Rent villas France
Hotels all over Syria
Hotel management company
University Lebanon
Arab Media News