Fuel Price Increase in Lebanon: Rising Burdens and Ongoing Calls for Structural Reforms

Fuel Price Increase in Lebanon and VAT Raised to 12% Amid Transport Sector Objections

The Lebanese government approved a new increase in fuel prices, including raising the price of a gasoline barrel by 300,000 Lebanese pounds, alongside an increase in the value-added tax (VAT) by 1% to reach 12%, despite objections from the transport sector.

Ministers of Health and Labor expressed reservations about the decision during the Cabinet session, according to Lebanese Information Minister Paul Merkos, who noted that the government emphasized improving the collection mechanism, reviewing maritime properties, and implementing other measures aimed at enhancing public revenues.

Additional Salaries

Merkos added that the Cabinet also decided to grant public sector employees six additional salaries, including full supplements for military personnel, based on the values established in 2019, with implementation to begin after the necessary laws are approved in the Parliament. The Cabinet also canceled the previous levy on diesel, in a move the government said aims to reduce burdens associated with this essential fuel.

Direct Impacts and Burdens

Meanwhile, Bassam Taless, head of the Lebanese Road Transport Unions and Federations, stated that while the sector welcomes wage improvements, it rejects placing additional burdens on citizens and the transport sector. He noted that any increase in fuel prices or VAT would directly affect transport costs and commodity prices, calling instead for funding alternatives that do not impact consumers directly.

Structural Reforms Absent

Deputy Prime Minister Ghassan Hasbani, along with his ministers, expressed rejection of the decision to raise fuel taxes, stating that it directly affects citizens, including military personnel, public sector employees, and Lebanese households. He described the decision as not supported by structural reforms in the public and financial sectors, warning of its potential consequences, while the government emphasized that the measures are part of efforts to secure additional resources to fund salaries and boost public revenues.

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