Salam once again defends controversial tax hike

Prime Minister Nawaf Salam said Friday that telling people the truth is not a choice but a must, as he defended new taxes approved earlier this week by his government.

"The financial situation we inherited is very difficult and the trust between the state and the people was damaged in the past," he said, vowing that "this won't happen again."

Cabinet approved Tuesday taxes that raise fuel prices and other products to fund public pay hikes, triggering street protests.

The tax increases are to support raises and pension boosts of public employees, after wages lost value in the 2019 currency collapse. Information Minister Paul Morcos said the pay increases were estimated to cost about $800 million.

Though the Mediterranean country sits on one of the largest gold reserves in the Middle East, it suffers ongoing inflation and widespread corruption. The cash-strapped country also suffered about $11 billion in damages in the 2024 war between Israel and Hezbollah.

Protesters blocked main roads in and around Beirut after the Cabinet's decision.

"We had to find a quick source to fund the raises. These are exceptional measures... but the government wants to reform the tax system, not just impose new taxes", he said, adding that he is committed to establish a fair tax system, as he vowed in his ministerial statement, and to fight tax and customs evasion and encroachments on public maritime and riverside properties.

While long-term reforms would take time, public employees were demanding a prompt fix to the ongoing wage crisis. However, the Cabinet's decision to increase taxes simultaneously with the pay hike was not seen as a satisfactory solution. Many in Lebanon, including public sector workers, felt they would effectively be funding their own raises out of their own pockets.

Earlier on Friday, the Minister of Economy inspected bakeries and supermarkets to ensure there were no unreasonable price hikes, following the cabinet's decision.

Salam hoped Parliament would study the new taxes objectively and accused those objecting to the move of resorting to populism ahead of the upcoming parliamentary elections, urging them instead to act responsibly.

"If anyone has a quick alternative to secure $800 million today — not a year from now — I would be the happiest person," he said.