This research examines the impact of the 1993 tax reforms in Lebanon on different groups of the population. These tax reforms, part of the national reconstruction plan, included radical changes in both direct and indirect taxes. The research analyzes the effects of the direct taxes on income inequalities. It then evaluates the social and economic implications of the indirect taxes using the gasoline tax as a representative case study.

The issue of public finance, and particularly the question of tax distribution and tax impact, are of utmost importance in the current critical phase of Lebanon’s postwar reconstruction process. A fair tax system ensures balanced growth and fosters a climate of political stability favorable to foreign investment. The Lebanese Center for Policy Studies (LCPS) commissioned this research in order to stimulate informed public discussion on this crucial topic. The stud is part of the broader work of the LCPS on public finance and policy issues and more generally on questions of social justice and equality.

The study was conducted by Drs. Abdallah Dah, Ghassan Dibeh, and Wassim Shahin. In the course of their research, the LCPS held an open workshop to present the preliminary findings of the study. The workshop was attended by economic and financial experts as well as by senior officials and policy makers. It provided a unique forum for discussion of the taxation system in Lebanon and possible measures to reduce the tax inequality, one of the major fiscal challenges facing the country in the postwar period. Many of the comments expressed at this workshop were integrated in the final study.

On behalf of the LCPS, I would like to thank Drs. Dah, Dibeh, and Shahin for laying down the basis for beginning to tackle this national issue. I also wish to thank Mr. Ghaleb Abu Mosleh, Senior Director and Head of Training and Development Department of the Central Bank of Lebanon, for his meticulous comments on an earlier draft of the study. In addition, I am grateful to all the participants in the workshop for their contributions. Thanks are also due to the Ford Foundation which generously provided funding for this project.

As usual, the LCPS staff spared no efforts to implement this project successfully. I would like to mention especially Ms. Badra Alawa, Mr. Sami Atallah, Ms. Rana Houry, Ms. Rosie Nasser, Ms. Michele Touma, and Mr. Michael Young for their research contribution and exceptional organizational skills.

Samira A. Atallah, Ph.D.
LCPS Executive Director
February 1999