In a video statement published late last night / early this morning from its Benghazi headquarters, around 50 Members of Libya’s Parliament (House of Representatives - HoR) rejected the newly introduced and controversial import taxes as invalid, declaring them null and void.
The statement by the gathered members read as follows:
- Any law, decision, or procedure issued outside the proper constitutional and legislative frameworks is absolutely null and void.
- Imposing sales taxes or fees on certain goods or services is invalid unless issued by the HoR in accordance with established legal procedures.
- Any procedure related to issuing or revoking decisions authorizing foreign exchange companies as dollar distributors has no legal effect.
- Foreign exchange companies have no legal standing if they operate outside the framework of the officially recognized banking system and in contravention of the role of commercial banks subject to the supervision of the competent authorities.
- Licensed commercial banks operating under the law are the only official channels for distributing foreign currency in accordance with the approved monetary policy.
- Trust in national banking institutions cannot be replaced by trust in private commercial entities, as this undermines the stability of the financial system and the prestige of the state.
- We emphasize that the lack of trust in banks must be addressed through oversight and institutional reform, not by transferring authority to non-banking entities.
- Any violation of this will subject the perpetrators to legal accountability.
- The immediate unification of public spending within a single general budget is necessary to ensure full transparency and uniform accounting standards.
- All expenditures must be subject to unified legislative oversight to eliminate double taxation and promote discipline and fairness in resource allocation.
- The members also called for the amendment of the HoR’s internal regulations (to control the unchecked decision-making powers of Speaker Ageela Saleh).
Background
It will be recalled that HoR members have been calling for an official parliamentary session to debate the newly imposed tax and Libya’s dire economic situation, but Speaker Saleh, and his deputies, had refused to call an official meeting of parliament.
Frustrated with this, the 55-odd members were forced to hold an unofficial meeting, without the presence of Speaker Saleh or his Deputy Speakers last night in Benghazi.
The controversial import taxes
It will be recalled that news first surfaced at the end of January this year that HoR Speaker, Ageela Saleh, had agreed to a request by Central Bank of Libya (CBL) Governor Naji Issa to introduce new import taxes.
The new import taxes were widely rejected by Chambers of Commerce, the Aldabaiba-led Tripoli government, the High State Council and a majority of active HoR Members.
Why new taxes?
Naji Issa sees new import taxes as the means to reduce demand for the US dollar through official letters of credit and through Libya’s black-market foreign exchange, thereby saving Libya’s fast diminishing hard currency reserves and defending the crashing black-market Libyan dinar exchange rate.
With Libya importing over 80 percent of its food consumption, the protection of the exchange rate of the dinar would, in turn, stop the runaway inflation, arrest price increases and protect the cost of living of Libyan citizens.
Gunfire at demonstrations
Last week Libyans demonstrated in several western-based cities. In Tripoli, gunfire was heard in the proximity of demonstrators. No injuries or deaths were reported.
The case against the taxes
Those opposing the new taxes object to them on a procedural level and an economic level.
First, the Tripoli Aldabaiba government believes it is up to it as the government to propose bills and changes in law to the HoR to debate and vote on – and it is not for the HoR to introduce new legislation - in collusion with the CBL.
Secondly, Speaker Saleh never convened a session for HoR members to debate and approve or reject the tax increases. Instead, Saleh approved them in his personal capacity in an under-the-table deal with CBL Governor Issa.
Thirdly, the government and private sector believe the new taxes will be even more inflationary, forcing prices up and further reducing the standards of living of Libyan citizens. This could lead to even more demonstrations which could escalate to violence and on to an existential crisis for the Tripoli government.
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