Lebanon ups spend by 65%, hikes VAT, tax

Lebanon's government issued a revised budget for this year that increases capital spending by 65-percent, while raising the value added tax to 12 percent from 10 percent and hikes the tariff on bank deposits to 7 percent from 5 percent. Expenditures will reach LBP21.3 trillion (US$10.5bn) while revenue is projected at LBP15.78 trillion, according to the revised 2012 budget draft announced by Finance Minister Mohammad Safadi. The projected deficit is US$3.7bn, about 8.7 percent of gross domestic product is higher than the original estimate of 7 percent, according to an emailed statement from the finance ministry. The government will levy a 15 percent tax on real estate transactions. The planned real-estate tax applies to land sales and real estate bought after 2009. Property bought before 2009 would be taxed 4 percent of the total sale amount. The government aims to reduce the country's debt to GDP to 134.8 percent from 135.1 percent last year. The government projects the economy to grow 3 percent this year from a preliminary 5.2 percent in 2011, higher than the projections of the International Monetary Fund which put growth last year at 1.5 percent. Lebanon's public debt amassed in the reconstruction period after the end of a 15-year civil war in 1990 and a one month conflict with Israel in 2006 reached about US$54bn at the end of February according to the Association of Banks in Lebanon. Inflation in the country grew 3.5 percent in April compared to the same month a year ago, according to the Central Administration of Statistics. From Arabian Business