President of the Beirut Traders Association Nicolas Chammas has called for the withdrawal of the proposed law imposing a tax on private sector individuals who have repaid loans “at a different value than the real value.” He criticized this as an unjust policy of double standards.
Following an extended meeting of commercial sector union representatives held at the Beirut Traders Association headquarters on Tuesday, Chammas, the Association’s President, expressed his disapproval of the proposed law imposing a tax on anyone who repaid their loans based on a value different from the real value, using the same terms as in the bill.
Chammas expressed his surprise at seeing the private sector, which had repaid its loans according to existing laws and regulations, being penalized. He contrasted this with the government, which had failed to pay its debts, stating that the government, acting as a responsible entity, should compensate its creditors.
He emphasized that the goal of creating a Deposit Recovery Fund, an absolute national priority, can only be achieved by acknowledging the government’s responsibility for the financial collapse and properly managing its assets in line with good governance principles. This would secure the desired financial resources, as outlined in the detailed roadmap previously proposed by economic organizations. He added that the state is primarily responsible for the financial hardships faced by the Lebanese people, including the rise of the bank check market, which is central to the issue of repaid loans due to a series of mistakes, including the disorganized default on euro-bonds and the declaration of bankruptcy in March 2020.
Chammas highlighted that the proposed bill consciously or unconsciously distinguishes between the old dollar (lollar) and the new dollar (fresh dollar), assuming their values are entirely different. He argued that the government’s actions severely impacted bank deposits and set an official precedent, undermining depositors’ hopes of recovering their money, which paradoxically contradicts the authors’ intended goal.
According to Chammas, loan repayments in recent years have been one of the two main reasons for the relatively recent economic recovery. They relieved businesses of their debt burdens, providing them with the financial capacity to invest, hire staff, increase salaries, stimulate the economy and boost tax revenues. Should this virtuous cycle be disrupted, and economic reality reset to square one?
He noted that “the height of absurdity lies in addressing only one aspect of the financial and economic crisis, such as examining liabilities without assets or profits independently of losses.” He also highlighted that the private sector has endured successive crises while being subjected to a tax on fictitious income due to inflation. Many merchants lost money on their receivables by continuing to pay interest expenses while earning no interest on their deposits and savings in banks.
Within the framework of the proposed law, unlike the provisions of the Currency and Credit Code, the bank check no longer represents a legitimate means of payment since it no longer covers the full amount in cash. This raises the question of how to resolve the payment dilemma, including rents, which were paid at a fraction of their value and deposited with notaries in full legitimacy, according to Chammas.
He concluded by calling for the withdrawal of the proposed law.