A compensation of August 4, 2020 victims

Until today no significant compensation has been distributed to all the victims of the huge Port of Beirut explosion of the 4th of August 2020. Only a slight number of citizens have received a cash compensation which we believe did not get close to the full cost of their material damage. This is without even mentioning those who suffered from the loss of lives of relatives or physical or psychological injuries.

Let us first stress on the fact that the Port of Beirut is owned by the Government of Lebanon and is operated by “Gestion et exploitation du Port de Beyrouth”. It is one of the top ten seaports in the Mediterranean Sea and serves as a gateway to the Middle East.

Whatever the causes, the owner, in that case the Government of Lebanon, has at least a financial obligation towards all the victims of the disaster.

It could be argued that the Government of Lebanon is bankrupt and has no capacity to pay for this liability or others. We doubt that the State has no capacity to pay all its liabilities but even if that was true, this extraordinary disaster requires extending an out of the box efforts of imagination to find an immediate solution.

If morality should be the beacon of the State activity, this effort should be a priority. We hope that our following modest contribution would help the State of Lebanon observe this universal standard. Our proposal is to issue Tax Credit vouchers delivered to each and every victim for the exact amount of their damage. These vouchers could be used for paying direct taxes incurred by the owners of the vouchers. The damages would be evaluated by Financial Experts. And the vouchers would accrue an interest of 3% from the date of the disaster and be tradable.

Evaluating the damages is certainly a considerable task but the sooner it is done the better. This assessment would also partially alleviate the profound feeling of injustice that is feeding the despair of Lebanese and swelling the ranks of those who are leaving the country for good.

Hence, the victims would become beneficiaries of tax advantages, and as they would be able to trade the vouchers, they would become ambassadors for investing into Lebanon.

Paradoxically this type of compensation would not cost the State much and would put the Lebanese economy into a virtuous circle. As of today, direct taxes are a shadow of what they were and they never represented more than 1/4 of the total revenues of the State. Even the tiniest improvement in GDP due to the State paying its due and settling its moral debt, would bring far more revenues in indirect taxes and in future direct taxes than what it would cost.

It is high time the State acts in a responsible way and stops being a spoiled child. This is a critical occasion for the Government of Lebanon to become mature.

Please note that, in Lebanon, direct tax revenues in 2019 were 5% for the income tax on wages and salaries and 7% for income tax on company’s profit.

Dr. Riad Obegi and Mr. Claude Khayat – 20 December 2021