The caretaker Minister of Finance Mr. Ghazi Wazni submitted to the government last week the draft budget law for the year 2021, anticipating a deficit of LBP 6,187 billion ($4.10 billion). In details, the budget anticipates revenues at LBP 13,572 billion ($9.00 billion) and expenditures at LBP 18,259 billion ($12.11 billion), whilst also allocating an LBP 1,500 billion ($1.0 billion) advance to EDL (on top of the expenditure figure). Revenue wise, the draft project suggests a high contribution for tax revenues (LBP 10,493 billion) to total revenues, at around 77.31%, with non-tax revenues (LBP 3,080 billion) expected to comprise some 22.69% of total revenues. Delving into details, income taxes (LBP 4,919 billion) are budgeted to be the major contributor (36.24%) to total revenues, with the share of the Value Added Tax (LBP 2,432 billion) and property taxes (LBP 922 billion) standing at 17.93% and 6.79% respectively. It is worth noting in this perspective that the draft budget law suggested the introduction of a progressive solidarity tax, ranging from 1% to 2%, on deposit accounts exceeding $1 million or LBP 1.5 billion, as well as a 30% tax on interest income exceeding 3% on USD denominated instruments and 5% on LBP denominated instruments. Expenditures wise, salaries, remunerations and retirement wages (LBP 10,444 billion) accounted for the lion’s share (52.86%) of anticipated expenditures, with debt service standing at LBP 3,106 billion (15.72% of budgeted expenditures) bearing in mind that said payments don’t include those on Eurobond instruments given the government’s default in March 2020. Capital expenditures on the other hand are anticipated to stand at a mere LBP 735 billion (3.72% of expenditures). The draft budget included a set of incentives aimed at stimulating the distressed economy such as subsidizing interest rates on investment-related loans (agricultural, industrial, information and communication technology, etc.), exempting (50%-75%) of profits on industrial exports from the income tax on the condition of reinvesting said profits in Lebanon. In addition, start-up companies (income tax waivers) and industrial & tourism companies (income tax reliefs) established after the ratification of the 2021 budget law also benefit from the provisions of the draft budget, on the condition that at least 80% of their taskforce is Lebanese, bearing in mind that income tax waivers also apply to newly-established companies (85% Lebanese taskforce) that operate in areas pinpointed by the government for development. In the same vein, the draft budget envisages tackling unemployment levels by abolishing taxes on first-time employees and unemployed Lebanese. The draft budget law also aims at encouraging deposit flows to Lebanon by exempting interest income on fresh deposits from taxation for a period of three years and by requesting banks to settle fresh foreign currency deposits in foreign currencies. The draft budget also proposes granting foreigners and their families (with the exception of Syrians and Palestinians) residence titles in the event they purchase apartments in Lebanon via fresh dollars subject to a floor of $350,000 within the Beirut governorate and $200,000 in other governorates. The draft law also allocated reserves to assist needy families (LBP 150 billion), those affected by the port blast (LBP 100 billion) while also addressing the repercussions of the COVID-19 pandemic (LBP 200 billion). Finally, the draft budget gave citizens the opportunity to install their taxes for the years 2019 & 2020 over a period of three years and abolished penalties on previously unpaid dues & raised the threshold on deposit guarantees to LBP 300 million on non-fresh deposits and to $50,000 on fresh deposits while on the other hand calling for the gradual adjustment of electricity tariffs.