Tariff hike depresses struggling Lebanese as reforms stall By Health & Fitness Journal

©Health & Fitness Journal. FILE PHOTO: The International Monetary Fund logo is seen at its headquarters at the end of the IMF-World Bank annual meeting in Washington, United States, October 9, 2016. REUTERS/Yuri Gripas//File Photo

By Timour Azhari and Emilie Madi

BEIRUT (Health & Fitness Journal) – Every time a part of his old gray Mercedes breaks, 62-year-old Beirut taxi driver Abed Omayraat faces a difficult choice: go into debt to import an expensive car part or raise fares for customers whose Wallets already empty are drained by a severe economic crisis.

It’s a dilemma he says has been exacerbated in recent months, with the Lebanese government raising tariffs tenfold on imported goods in a country that consigns more than 80% of its consumption – including the spare parts it needs increased.

“My tires are now ready, you can see that they are worn out. When it rains I worry that the car will slide,” said Omayraat. A change is necessary, “but I can’t afford it.”

Now in its fourth year, Lebanon’s economic collapse has seen the currency lose more than 95% of its value and left eight out of ten Lebanese poor, according to the United Nations.

As foreign exchange coffers dwindle, the state has already lifted subsidies on fuel and most medicines.

Raising the rate at which customs duties are charged will boost government revenue, officials said, and is a step toward unifying various exchange rates.

They are among the conditions the International Monetary Fund set in April for Lebanon to receive a $3 billion bailout, but the lender of last resort says the reforms are too slow.

The tariff jump came into effect on December 1st. Import taxes were calculated using an exchange rate of 15,000 Lebanese pounds per dollar instead of the old 1,507, meaning traders suddenly had to pay a lot more to import products such as home appliances, phones or car parts.

That will add even more financial pressure on people struggling to make ends meet.

Omayraat says many passengers are already asking for reductions on the standard LL40,000 fare.

“Are you telling a person you want a £100,000 fare? I’m basically telling them: Don’t ride with me. He can neither afford it nor can I take him with me. He can’t eat and I won’t be able to eat,” said Omayraat.

Rabih Fares, an architect from north Lebanon who started importing used cars when business slowed, said the new rate will force car dealers to raise prices or go out of business.

“You have to work four to five years just to be able to afford customs duties on a car now,” said Fares, who estimated the cost of importing a used car averaged 94 million Lebanese pounds — or about 156 times the monthly rate minimum wage .

The Treasury said revenue collected over the 15 days since the decision went into effect showed a “big difference” but the figures would be available by the end of the month.

Parliament agreed on the tariff in September, but it wasn’t introduced until December – a delay that allowed traders to load up on imports ahead of the tariff increase while raising selling prices, Acting Economy Minister Amin Salam said.

“When you announced it three months ago, it’s like saying to those who don’t want to work directly in the market: find a way to capitalize on it. And that’s what happened,” he said.

It has left him skeptical that Lebanon will implement the reforms needed to secure a definitive IMF bailout in the coming months.

“As we are now, in my personal opinion, I don’t see it happening anytime soon – which worries me because, as I said, every day of delay is costing the country millions and millions and causing pain and misery for the people,” he said Salam to Health & Fitness Journal.