Roadblocks paralyse Beirut after Lebanon announces fuel and VAT hike

Lebanese protesters blocked a major highway in central Beirut and the main coastal road south of the capital on Tuesday morning, after the government approved a sharp increase in gasoline prices and a rise in VAT from 11 to 12 percent to fund a salary increase for public sector workers.

Demonstrators shut down the Ring Road, a key artery linking east and west Beirut, as well as the highway in the Khalde area, a strategic junction just south of the city that connects Beirut to the airport and to southern Lebanon.

The overnight cabinet decision includes a 25 percent increase in gasoline prices - part of a broader package aimed at funding a temporary salary rise for public sector employees, members of the armed forces and pensioners.

The increase is equivalent to six times their 2019 Lebanese pound salaries, before the country's currency collapse.

The raise would take effect on 1 March and would not exceed 50 million Lebanese pounds ($560) per month per employee, but is reliant on parliament approving the VAT increase and opening additional budget credits to fund the salary increases, which is estimated to cost around $800 million annually.

The measures also include a new excise charge of 320,000 Lebanese pounds ($3.57) per 20 litres of gasoline, additional fees on shipping containers at ports, and steps aimed at improving customs collection and tackling smuggling at illegal border crossings.

It comes before a key round of talks with the IMF in April, with the financial institution insisting any new spending commitments should align with a credible medium-term fiscal framework.

Union backlash

Beshara al-Asmar, head of the General Confederation of Lebanese Workers, rejected the new taxes, saying the government was placing the burden of public sector wage increases on the working class instead of finding alternative sources of funding.

In comments to local media, he called for an emergency meeting to discuss a possible escalation.

Several other unions also warned that the increases would drive up prices of goods, transport and basic services in a country already struggling with soaring living costs.

Prime Minister Nawaf Salam defended the decision during a visit to the northern port city of Tripoli, saying the government was working to improve tax collection and regulate state revenues.

He argued that VAT would affect wealthier Lebanese and that while gasoline price rises were unavoidable, a hike in diesel prices was cancelled to protect lower-income households.

The tax hikes have revived memories of October 2019, when a proposed daily charge on WhatsApp voice calls triggered mass nationwide protests that became known as the October Revolution.

At the time, the government attempted to introduce a fee of about 20 cents per day on internet-based calls to raise revenue amid a mounting debt crisis.

Although the plan was quickly scrapped, it ignited weeks of demonstrations against corruption, economic mismanagement and austerity, eventually leading to the resignation of then Prime Minister Saad Hariri.