What is tax?
Tax has been defined in various ways throughout time to signify mainly that it is a cash levy (contribution)required by the public authority from either individuals and legal entities called taxpayers according to their ability to pay, in order to cover public expenses or for purposes of intervening in the social and economic life of a nation. This differs from other subscriptions such as government bonds which require the latter to repay the contributor in accordance with agreed upon conditions.
What is the use of tax?
First of all, tax has a financial function: it enables the State to provide for public expenditure and cover the various expenses resulting from its operational units such as salaries of civil servants, the ownership and operation of public assets, internal security, border protection, foreign representation, etc.
It also has a social function as it allows, through the arrangement of punctures and deductions or through exemptions and incentives granted to certain categories of taxpayers, to achieve greater equality and fairness in the distribution of income and render tax an instrument of national solidarity. Finally, it has an economic function in that allows the State to achieve certain objectives aimed at encouraging investment, stimulating growth, encouraging entrepreneurship and territorial planning or to fight against inflation and saturation or dumping.
Who decides to tax?
The law is the essential source: This implies that The Parliament, which is an expression of national sovereignty, has sole jurisdiction to vote on taxes, modify or eliminate them. This predominance of the law as the sole generating source of tax is protected in Articles 81 and 82 of the Lebanese Constitution. It should be noted however that not all tax provisions are contained in the law. The executive authority (Council of Ministers, Ministry of Finance and tax administration) is in charge of specifying by regulatory texts, the practicalities of implementing legislation.
What is fiscal good citizenship (tax compliance)?
Tax compliance is a matter of mindset, mentality and behavior. It is the spontaneous compliance with national tax duty to consent to strengthen the commitment to the common good. It is therefore the voluntary compliance by taxpayers with their tax obligations. It is almost as a culture based on rights and responsibilities under which every citizen would consider that the payment of taxes is an integral part of his/her relationship with the public authorities and allowing them to hold the latter accountable through his/her representatives. ALDIC however, remains convinced that the tax incivility in Lebanon is not always deliberate or conscious, but rather the result of lacks of information and simultaneously, an adaptation of cultures.
What is the use of a Finance Act?
The Finance Act or Budget Law is the most comprehensive and precise expression of government policy and the main instrument of its economic strategy. It determines, for a fiscal year that is usually the calendar year (January 1st to December 31st), the resources and expenses of the state and usually comes in a dual function of prediction and authorization.It includes a fiscal policy that consists of a set of measures having an impact on resources and expenditures in the state budget and directly acts on not only the economic conditions but also social and political.Its enactment is however conditional upon the prior submission to theParliament, for approval, of the accounts of the administration of previous years related to finance and the establishment of a settlement law which decides the final amount of the budget revenue and expenditures and the execution budget balance relating to the preceding year.
Who controls the collection and use of the tax?
The control of public finances in Lebanon is very complex. It involves various services and state agencies in connection with specific assignments subject to strict procedures and legal rules that guarantee the accuracy and legality of their work. It is based first of all, concerning the management of public finances and the execution of budget law, on a separation between firstly the officers (administrative functions, generally ministers and their representatives) who decide sensibly the purpose of expenditures and on the other hand, accounting services (executive functions) managing the revenue and expenditures. This allows through the independence of the two services to prevent, in principle, irregularities and malpractices.
It then focuses on the control of execution that includes a priori control procedures designed to prevent irregularities and a subsequent check for sanctions. The priori control is handled by internal administrative services (Ministry’s financial condolers, Finance Central Inspectorate, State Audit Office, etc.) whereas the subsequent control is undertaken by the either the State Audit Office (judicial control) or the Parliament (political control).
What sanctions apply in case of irregularity?
The violations of the principle of segregation of duties and administrative irregularities, which can lead to officers or accountants allowing themselves to handle public money by playing the dual role of decision maker and executor or collusion situations between officials of the same service, are normally pursued by the financial jurisdictions. Sanctions would be disciplinary and/or would include fines imposed, sometimes criminal charges and would vary according to the severity of the offense. Therefore as an example, a minister who exceeds the permitted spending allocations or increases expenses without authorization and without control or an accountant who executes an irregular order, will be held accountable by committing their personal and financial responsibility (Articles 112 and 173 of the Public Accountancy Act).