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The Constitutional Council (CC) suspended on Monday the application of five articles of the budget law for fiscal year 2024, following an invalidation appeal lodged by the Lebanese Forces (LF). What does this mean in practical terms, and what are the consequences of this decision?
The Constitutional Council (CC) suspended on Monday the application of five articles (36, 45, 72, 92, 93) of the budget law for fiscal year 2024, following an appeal for invalidation lodged a few days earlier by the Lebanese Forces (LF) and deemed valid. The LF considered that the articles constituted “budget riders,” meaning legislative provisions that have no place in the framework of finance laws. Budget riders are liable to be invalidated by the Constitutional Council.
Nassib Ghobril, chief economist at Byblos Bank, explains to This Is Beirut that only these five budget items will not be applied. The others will not be affected and will be implemented normally. In practice, “The taxpayer will not be subject to the taxes and levies relating to these five articles until this situation is clarified or unblocked,” he says. He adds that this will “further affect Treasury revenues, in proportion to their projected income in the budget, especially if these five items remain suspended throughout the year.”
In any case, the economist says, “Treasury revenue projections in this budget are highly uncertain due to the uncertainty resulting from the deteriorating situation in the south of the country and the war in Gaza.” After October 7, Ghobril hoped that the government would withdraw this budget from Parliament and modify the revenue projections, given that these figures are highly theoretical in view of the conflict.
In conclusion, Ghobril assures that there are “far more important factors hovering over the budget’s performance than the CC’s decision to suspend five articles.”
Unconstitutionality of the Budget
Twelve LF MPs have called for all 95 articles of the budget law to be annulled, citing their “unconstitutionality” and the failure to apply the law requiring the previous year’s accounts to be closed before the budget for the following year can be enacted. This is not the first time that such an appeal has been lodged: the 2018 budget law was the subject of an appeal on the same grounds, but it was rejected at the time.
In theory, the CC has one month to debate the suspended articles and rule on their annulment or validation.
What Are These Articles?
Article 36 concerns the increase in municipal taxes based on an increase in the assessment of the rental values of built-up land.
Article 45 concerns penalties for breaches of the principle of free access to public beaches.
Article 72 prescribes payment in foreign currency of penalties due for false declarations or late payment of taxes payable in foreign currency.
Article 92 imposes a 17% tax on gains of over $15,000 made on the Lebanese Central Bank’s Sayrafa platform.
Article 93 imposes a 10% tax on amounts in excess of $10,000 obtained by companies having taken advantage of subsidies granted by the Central Bank to make up the difference in exchange rates.