Libya’s Benghazi based parliament, the House of Representatives (HoR), confirmed in a statement yesterday that it will not impose any taxes or fees on basic and necessary goods for citizens.
However, it indicated that, nevertheless, the matter is still under study and review by the competent authorities and institutions, and that it will not take any decision on the proposal except in the interest of the citizen and in support of the economy.
The rationale for imposing a new tax
It will be recalled that there has been opposition to the idea of the HoR imposing new taxes on imported goods as part of the efforts to reform Libya’s ailing economy.
The rationale behind this new tax proposal is to reduce consumption and imports, reduce the demand on the dollar in the black-market, reduce the depletion of Libya’s hard currency reserves, strengthen the Libyan dinar, reduce prices and improve the cost of living and divert hard currency state revenues to other needy and productive sectors.
Opposition from Chambers of Commerce
Early opposition to the introduction of a new tax has come from both Misrata and Zliten Chambers of Commerce in separate meetings held on 22 January and 24 January, respectively.
Businesses are worried that increased costs to consumers would depress even further the already depressed demand in view of the recent dinar devaluation and the relative slump the Libyan market is suffering aggravated by the liquidity crisis and the withdrawal of the old money notes by the Central Bank of Libya.
They are also particularly worried any tax may effect demand in the usually high-consumption fasting month of Ramadan starting around 18 February.
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Misrata Chamber of Commerce holds meeting with companies to discuss HoR’s new tax bill
