Rewrite Lebanon’s unfair tax laws

by Jad Chaaban March 6, 2014

written by Jad Chaaban March 6, 2014

Lebanon's tax system is unfair and unproductive

As part of Executive’s ‘10 Ways to Save Lebanon’ issue, we asked leading experts from a range of fields to put the case for one major policy for the country. In this article, economist Jad Chaaban makes the case for rewriting the country’s tax laws. Lebanon’s current tax rules are both deeply unjust and ultimately counterproductive. They are unfair primarily because they rely so heavily on indirect taxation — mostly Valued Added Tax and taxes on consumption. On average, when you buy goods in Lebanon, 18 percent of the cost is tax. These indirect taxes make up 70 percent of the government’s revenue and equate to around 12 percent of gross domestic product. In contrast, direct taxation — income tax and other levies paid directly by individuals and companies — represent just 6 percent of GDP, compared to 15-20 percent in most western European economies. This is vitally important

Jad Chaaban

Jad Chaaban is a French/Lebanese economist and public policy expert with over 15 years of academic and professional experience. He was an associate professor and Assistant Dean at the American University of Beirut, and has held positions at INSEAD, Paris-Dauphine PSL University, LSE, and Toulouse School of Economics. He has worked as an economist for the World Bank and as a consultant for various UN agencies. Dr. Chaaban holds a PhD in Economics and an MBA, and his research focuses on development economics and public policy. He is multilingual and has secured nearly $4 million in extramural funding for international research projects.

3 comments

E March 6, 2014 - 1:54 PM

You compare the tax regime to European countries. However, in European countries, the taxes are much higher than in Lebanon, but in return the people get access to free/low cost schooling, medical care, unemployment & retirement benefits, etc etc
Would you think by increasing the taxes, the Government should not offer these things? if so, what would be the impact on the budget?

Kermit March 7, 2014 - 7:33 PM

Reforming the Taxation module, is a good place to start a discussion on public revenue. Citizens expecting a return on their taxable income in the form government services is a good place to start a discussion on government public spending and civic responsibilities.

Talk is good. But every time someone in Lebanon starts coming up with ideas on how to ‘modernise’ the establishment or using a ‘western’ setup as a blueprint evades the base of all civic development.

In the West, there are several taxation modules and several civil modules. Some are flawed, some are not; but their existence is based on a singular service that makes them all function. The same singular service that in Lebanon keeps on being ignored and perhaps has contributed over the many years why so much public reform has failed.

I am talking about the Postcode system and I certainly do not just mean having letters delivered to a particular address.

In the West, everything from income to electoral registrars to asset ownership to government planning and development to statistics etc .. are all linked to fixed addresses – a code – a post code.

Until every dwelling in Lebanon has a fixed (government-issued) house number and every area has a fixed (government-issued) post code, only then can you start establishing and enforcing direct taxes as well as providing public services to postal areas. No reform plan will ever work without proper planning, no planning can be conducted without public statistics, every civilised statistics module is based on variables between areas/postcodes and every public service that we receive here is linked to the Full Name and Address.

Kemal April 18, 2017 - 4:26 PM

Absolutely agree, the country needs a complete reform of the tax system.

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Rewrite Lebanon’s unfair tax laws

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