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The prime minister and the income tax

May 21,2018 - Last updated at May 21,2018

Since I left my job as deputy prime minister a year ago, I had two brief encounters with Prime Minister Hani Mulki. The first was on the occasion of last year’s Independence Day, and the second was earlier this month at the EBRD Annual Meeting and Business Forum in the Dead Sea.

I was happy for Mulkis’ restored health. He looked cheerful, happy, active and cuddly. He took me to his chest with a warm embrace and kissed my cheeks. I was about to tell him while exchanging kisses and embraces: “But I do not like you.” Had I said that, I am sure he would have snapped: “Not true, you do like me.”

After that encounter, an idea dawned on me. Did Mulki become a better prime minister after his brief brush with cancer? Did his positive spirit in living with the serious disease prompted him into dealing better with the economic situation of the country?

I think his attitude and the content of his public address have improved variedly. His words are chosen and his sentences are more coherent and focused. He exudes more positivism and he is less tempered than before.

Seizing the moment, I want to draw an analogy between his health and the proposed income tax law. The text of the draft law was published in social media platforms to attract comments. The feedback so far has been negative. People are too encumbered by the extra taxes and tariffs imposed on them over the last six years. “No more,” they say, “we cannot take it anymore.” 

Well, income tax reform should have been a priority. The current income tax law gives generous exemptions, which almost erase the redistributive effect that is supposed to be embodied in income tax legislations.  

Moreover, people are saying that increasing income tax rate will hit the middle class, which the government always says it wants to expand. People also reject the government’s claim that income tax is a “patriotic tax” that asserts good citizenship on the part of its payers. Taher Adwan, a leading journalist, wrote on this notion, scrapping the government position horizontally and vertically.

I think the government is correct in all of its claims, yet, its selling power needs improvement. Income tax is patriotic in the sense that the cost of paying is not linked to the benefits expected from it. You pay tariff because you choose to buy an imported good, you pay sales tax because you decided to buy a good or a service, but you pay income tax because you can.

However, the cure of reforming income tax comes at a time when the economy is ailing. It is like taking a harsh medicine when one is sick. The question that we need to answer is will the new, more burdensome income tax law cure our illness, or will it produce side effects that are worse than the disease we aim to cure?

The government should prepare a plan B, in case the Parliament, which is weary of sharp public criticism, decides not to let it pass in its current form. 

Mulki needs to reveal the same spirit, which saved him with the Grace of God from his illness, in dealing with the proposed income tax law.

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