“We won’t pay our taxes or bills until they give us back the money they took,” read a tweet from a Lebanese Twitter account called “We Won’t Pay” that was opened two weeks ago.
It represents a new phase in the civil revolt in Lebanon that began in October, whose casualties so far include Prime Minister Saad Hariri, who resigned that month. Lebanese President Michel Aoun has tapped Hassan Diab to replace him.
It isn’t clear how long Diab will need to set up a government with a consensus of support, a process that in the past has taken months before the distribution of cabinet portfolios was complete. But the people behind the tax protest aren’t prepared to sit tight and wait patiently. They are calling on the Lebanese to stop paying their electricity and water bills, municipal taxes, fines and even their bank loans payments.
“Until there is a government that we trust that can manage the state’s money properly, there is nobody to pay these taxes to,” the Twitter account holders explained. They added the reassurance that the electric company doesn’t cut off service until two or three bills go unpaid. And it takes time before the debt gets referred to a collection agency.
The penalty for non-payment is no deterrent either. It’s the equivalent of $3, however high the outstanding debt is. That could also explain why Lebanon’s electric utility, which has become a symbol of waste and poor management, has debt estimated at about $2 billion. The power company, which is responsible for a hefty chunk of Lebanon’s entire government debt, isn’t only plagued by its failure to collect outstanding bills. Its other problems include bloated salaries, electricity theft, poor power line maintenance and unreliable power plants.
The government deficit
It’s no wonder that the power company, more than any other institution in the country, has become in the target of the protests. Every year the Lebanese government gives the power company about a billion and a half dollars, mainly to pay for the fuel it needs. That represents a significant portion of the country’s budget deficit.
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According to a 2016 International Monetary Fund report, the government has supplied the utility with a sum equivalent to 40 percent of the national debt, which is 150 percent of Lebanon’s GDP. Those figures are enough to explain the impossible challenge that any Lebanese government faces.
It’s also clear why people who have to resort to pirated electricity or their own generators won’t pay the bills to a failing company that hasn’t been able to supply the country with sufficient power for over 30 years.
The electricity supply may be the most talked-about problem in Lebanon but it isn’t the only one. Lebanon placed 74th out of the 77 countries whose school students participated in PISA scholastic achievement testing. An in-depth analysis of the results by Dr. Ali Khalife of the Lebanese University’s education department reveals that just 40 percent of the students tested attained Level 2 out of six levels. The international average is 76 percent. And only a third of the Lebanese students tested attained Level 2 in reading comprehension.
Khalife places the blame on poor distribution of resources, inadequate budgets, outdated methods that have forced Lebanese students to handwrite their tests rather than submitting their answers digitally and built-in discrimination against poor regional schools compared to wealthy private ones.
The electricity problem can be solved with money. The education problem will require profound reform lasting years and a lot more resources than the government can provide.
Health care in crisis
And when it comes to the level of failure and neglect, the Lebanese public education system faces stiff competition from the public and private health care systems. Government hospitals haven’t received any funding in 2019 and are running out of drugs. Restrictions on the use of the dollar are holding up not only development plans but even repairs of medical equipment and the import of spare parts. In November, doctors and medical teams held a warning protest to bring the crisis to the public’s attention, but in the absence of a government, there is nobody to direct protests and complaints to.
It was only serious corruption discovered at a government hospital – exposing massive theft of funds by hospital administrators and the person responsible for medications there – that managed to spark media attention, but it’s probably not enough to spur the reforms the sector needs.
In addition to its chronic problems, Lebanon has paid an economic price for three months of protest and upheaval. Hundreds of restaurants and other businesses have shut down. Hotel occupancy dropped from 95% in prior years during the Christmas and New Year season to 30%. Some hotels have closed down entire floors and laid off staff.
Manufacturing plants requiring dollars to import raw materials have been barred by banks from transferring dollars abroad. Citizens can’t access their deposits and ATMs have no dollars.
The still non-existent government of Prime Minister Hassan Diab has no solutions for all of this. And things aren’t expected to improve any time soon.