Three years after the deterioration of the dollar exchange rate and the decline in the value of the national currency by 97%, the customs dollar was liberated from the grip of the official fixed exchange rate at a value of 1,500 pounds gradually to 15,000, then 45,000, then 60,000, then finally 86,000 pounds, according to the “Sarafa” platform that was linked to with its moving cursor upwards.
However, it is not possible to build on this exchange rate in the long term, as “safa” catches up with the exchange rate of the dollar on the black market, whose rhythm was set about two months ago by the Banque du Liban before daily increases that it recorded, the last of which was 10 and 20 thousand pounds in a few hours. In the first half of last March.
This reality raises questions about the return that the customs dollar, currently set at 86 thousand pounds, will achieve on the treasury, in exchange for the cost that the citizen will incur?
It is difficult to accurately answer this question, but some statistics, especially those previously issued by Information International, stated that when the customs dollar was set at 15 thousand pounds, it showed that if the value of imports constituted about $17.4 billion, which is the average rate between the years 2016- In 2022, revenues from customs duties alone, excluding consumption duties, constitute the equivalent of $418 million. This number is not fixed, of course, even if it is multiplied by the modified customs dollar price, given that the revenue changes according to the value of imports that will be achieved during the current year.
However, the dilemma is that the percentage of customs duties of total treasury imports (historically) constitutes about 3%. This means that it will not “drain a little from the beer,” but it will contribute a small percentage to the treasury’s revenues, and the burden will be greater on it.
Unscientific and hybrid procedure
In this context, Professor Maroun Khater, a writer and researcher in financial and economic affairs, said that the increase in the customs dollar comes today in a step that reflects the extent of confusion and lack of seriousness in approaching the files, as the current government raised the customs dollar for the third time in a few months.
Considering that this “unscientific” and hybrid measure does not constitute a precedent in itself, but is a continuation of the approach of this government and its antithetical approach to the joints of the Lebanese crisis in politics as well as in the economy.
In practice, Khater explains that “raising the three-dose customs dollar is not based on a flexible study that diagnoses the problem that undoubtedly lies in the state’s ability to collect, and not only in the size of the amounts collected.”
Logically, he believed that “it is difficult to find an explanation for the insistence on financing the increase in spending resulting from the increase in salaries from customs, which constitutes only a small percentage of the sources of revenue.”
Khater relied on Information International, which estimates the volume of imports generated by customs for the year 2022 at about 1095 billion pounds, while the total imports of the state are estimated at 40 thousand billion pounds. That is, customs duties constitute only 2.7% of total revenues,” to conclude that increasing taxes and fees at a time when the economy is not growing, scientifically keeps the revenues theoretical, book-based, and uncollectible. He asked: “How would the solution be, then, in a country where the economy is shrinking?” In conjunction with the flourishing of evasion, smuggling, the shadow economy, and the loosening of borders?
Widening the margin between citizens
With regard to the repercussions of the increase in the customs dollar on the livelihood of the Lebanese, Professor Khater said, “The repercussions are manifold for Lebanon and the Lebanese. Economically, this ‘primitive’ increase pushes towards an increase in evasion and smuggling in the absence of oversight and accountability.”
On the other hand, this increase widens the margin of discrimination between citizens who believe in the state and those who disregard citizenship and the law.
In tax terms, this increase leads to an increase in the value-added tax in terms of the size of the tax plate, in addition to the increase resulting from the start of pricing based on the price of an exchange platform. This results in more pressure on those who submit to the provisions of the law, which will reflect a radical change in the lifestyle of many who may find themselves drawn to join the train of evasion. However, the most dangerous thing in all of this lies in the fact that the large part of the increase in the prices of goods and services that the citizen will bear will not reach the state, given its absence, inaction, and inability to monitor and be held accountable for a thousand and one reasons. For these and other reasons, of course, the legitimate visionary government, which believes in growth as a way to salvation, will not be able to secure the financing of the spending increase that it approved except through printing! As for nature, it leads to a vortex that leads to a demand again to raise salaries, in a recurrence to a beginning that will apparently end only with answers or an earthquake that brings us back to the ground.
As for the citizen, the repercussions of this measure vary sectorally in relation to the customs duties imposed on goods. The majority of food commodities are not subject to customs duties. Such as rice, sugar, and grains that are exempt from customs, but based on the decisions of the 2022 budget, every commodity pays this tax, as the head of the Syndicate of Foodstuff Importers in Lebanon, Hani Bohsali, has repeatedly confirmed. Therefore, a specific fee of 3% will be attached to it, which means that the price of the commodity will increase by 3%. . In addition, every increase in the value of 15 thousand pounds in the customs dollar reflects an increase of 5.5% in dollars on the item whose customs reach 35%, such as canned vegetables and fruits, and thus raising the customs dollar from 45 thousand to 60 thousand and then to 86 thousand, which means an increase of about 15% This is called a direct effect.
A proposal to exempt vegetables, fruits and canned food
With regard to vegetables and fruits, on which customs duties are about 5%, a member of the “Democratic Gathering” bloc, Representative Bilal Abdullah, submitted to Parliament a proposal to exempt foodstuffs from customs duties, including vegetables and fruits, whether fresh, canned or cooked. For a period of two years, with exceptions from this exemption: salmon fish and their derivatives and fish seeds prepared for food (caviar) of all kinds.
Commenting on this proposal, Abdullah explained to “Nidaa Al-Watan” that this proposal came to save the citizen’s shoulders the costs of basic foodstuffs, regardless of the value of the customs dollar, which is rising, reaching the black market price, with the aim of unifying the exchange rate.
Farmers Association
In turn, the head of the Lebanese Farmers Association, Antoine Al-Hawik, indicated to “Nidaa Al-Watan” that “vegetables and fruits are usually imported to Lebanon from Arab countries based on the Arab Facilitation Agreement and there are no customs duties on them. As for those that come to Lebanon from Europe, they are “Deluxe products” and their percentage is no. It exceeds 5%, pointing out that even the products that we receive from the European Union, the customs duties imposed on them are 0% for all foodstuffs, unless the aim of the law proposal is to exempt food commodities that come from China, India or Africa. It should be noted here that this proposal of Abdullah’s law will be useful in terms of canned goods for corn, mushrooms and vegetables…on which a fee of 35% is imposed, which is a high percentage, and which is affected by the increase in the price of the “customs dollar”.
The most affected used cars!
It is no longer new to say that imported used cars are considered the sectors most affected by the increase in the “customs dollar”, knowing that the car sector used to provide the state treasury with relatively large revenues, and customs duties on used cars amount to about 55 percent of the value of the car (customs fee + consumption fee). + Value Added Tax) will be paid on an exchange dollar if approved, meaning that the car whose customs duties were $2,000 will rise to about $20,000.
In this context, the head of the “Used Car Importers Syndicate,” Elie Azzi, told “Nidaa Al-Watan” that “when we fought the battle to amend the customs dollar, the value of the customs dollar was 20 or 25 thousand pounds, and we were not aware that the dollar would reach 100 thousand pounds. Hence, the price of 86 thousand pounds for the customs dollar does not suit us, even if it was reduced to 50 thousand pounds. Therefore, there is a trend towards bankruptcy and the closure of car showrooms according to this method, as this pricing is not fixed. This will negatively affect several sectors, such as insurance and shipping companies, paint shops, garages, car parts, wheels, and mattresses… Azzi stressed the need to amend or cancel the consumption fee. Otherwise, the used car sector, including importers and showrooms, will head to closure and bankruptcy, and we will contact the Ministry of Finance to find ways to reduce or cancel the consumption fee. Today we have entered a new phase and it is necessary to amend the laws.”
Scientifically, the customs dollar must be liberated from the lira in response to the International Monetary Fund’s demand to liberalize the exchange rate and subject it to the market of supply and demand, if this is accompanied by a round of reforms and political stability, and if its rate is reduced in some sectors. But in our current situation, the step to liberate the dollar will remain incomplete and will not fulfill the purpose for which it was created, as smuggling will rage and revenues will be lost to the treasury, and burdens will increase on citizens’ purchasing power, which is taking austerity despite people’s “psychological” adaptation, even though today’s dollar is no longer like yesterday’s dollar!
Patricia Glad – The Call of the Homeland
