Ministers Boast of Being Winners of Cabinet Decision to Cancel VAT on Red Diesel
The cabinet cancelled the Value Added Tax on red diesel on Thursday as ministers loyal to Free Patriotic Movement leader Michel Aoun on one hand and PM Najib Miqati on the other boasted that they were behind the decision.
The removal of the tax would be effective as of Monday and the parliament is expected to endorse it soon.
Despite agreement among cabinet members on the measure, Energy Minister Jebran Bassil, who is loyal to Aoun, and Economy Minister Nicolas Nahhas, who represents Miqati in the government, each bragged about being the main backer of the decision.
“What happened today is an achievement after the battle that we fought since 2008,” Bassil said after the session held at Baabda palace.
He hoped that owners of electricity generators, which work on red diesel, would lower their prices after the government’s decision.
Nahhas snapped back saying the approval of the VAT cancellation was a “response to one of the demands of the General Labor Confederation that had made the suggestion during its meeting with the prime minister who in his turn approved its request.”
But ministerial sources told An Nahar daily that Miqati and Health Minister Ali Hassan Khalil had brought up the issue during a cabinet session two weeks ago as a request made by the GLC.
Miqati stirred the subject again at Wednesday’s session and was adopted, they said.
The government also discussed Finance Minister Mohammad Safadi’s 2012 draft state budget but postponed deliberations on the issue until the next session after many ministers expressed reservations at his proposal to increase VAT by 2 percent to reach 12 percent.
They also refused to raise the prices of gasoline by 1 dollar, saying the citizens can no longer suffer from economic and social burdens, ministerial sources told As Safir newspaper.
Some ministers suggested increasing taxes on high income-generating companies and luxury items such as fancy cars to prevent low income citizens from paying more taxes, the sources said.
But Miqati told the ministers that the treasury cannot suffer from a financial deficit above its current levels, urging them to think on how they could guarantee the necessary income for the state.
“If there are any alternatives to the VAT hike, I don’t have a problem it that,” he said.
Aoun’s Change and Reform bloc ministers submitted to the government a 15-page report on how to solve the fiscal problems, An Nahar said.
It added that the cabinet will hold two sessions next week to continue discussions on the draft budget.
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