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French Version

Business community urges support for reforms

Berchants want critics to make suggestions instead of protesting

Various members of the local business community denounced Tuesday's protests against Prime Minister Fouad Siniora's economic reform plan, reiterating their near-unanimous support for the upcoming Paris III donors conference as the only hope for Lebanon's economic survival. The General Labor Confederation (GLC) expected to mobilize between 5,000 and 10,000 people in opposition to one of the measures proposed by the current administration - the increase of the 10 percent Value Added Tax (VAT) to 12 percent in 2008, then 15 percent in 2010 - but only about 1,000 showed up for the protest.

The rally drew widespread condemnation from commercial and industrial leaders, who called for unity and coordination between all those affected by the current paralysis.

The head of the Mount Lebanon Chamber of Industry and Agriculture, Ghazi Qoreitem, implored the opposition to carefully examine the reform plan and offer specific recommendations for its improvement, rather than holding a new sit-in at the Energy and Water Ministry on Wednesday as promised.

"The reform plan and Paris III benefit the entire national economy. That's why it is no use for only one economic body to take unilateral action and strike," Qoreitem said in a statement released Monday. "Such reactionary measures will only hurt business and the local labor force."

Though vocal members of the business community wholeheartedly endorsed Paris III, where international donors are expected to offer Siniora's government a combination of grants and soft loans to finance postwar reconstruction and help service Lebanon's $41 billion budget deficit, reactions to elements of the revised reform plan, seen as vital for donor confidence, were mixed. "I am in favor of Paris III in principle, and we back it without any reservations, but we only support a rise in VAT in principle," Association of Lebanese Industrialists (ALI) president Fadi Abboud told The Daily Star.

"We realize the VAT is a relatively cheap and modern tax," he said, "but back in 2002 when it was implemented, we were promised that the consumption tax on certain goods would be gradually [phased out] but this promise was not kept.

"We believe that an increase in the VAT to 12 percent and then 15 percent should follow the promised reforms the government has yet to implement, especially at a time when corruption and theft are so widespread," he added.

The ALI is also in favor of reforming the VAT legislation passed in 2001, which it says contains too many loopholes that foster unfair competition, and allow tax evasion and black market activity to proliferate. Under the existing law companies can easily evade business regulations by operating under multiple names and importing products without the proper invoicing, said Abboud.

The group also advocates decreasing the threshold of LL150 million in annual turnover at which a company is required to register for the VAT, and applying different VAT rates for various goods and services, as opposed to the current 10 percent on all merchandise. Finally, the body favors amending the list of VAT-exempt products before hiking the tax.

Beirut 10-01-2007
Lysandra Ohrstrom
The Daily Star

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