On 16 July, the State Council halted the implementation of an additional fuel levy that had been authorized by the Council of Ministers on 29 May. The decision represents a significant win for a more effective fiscal framework. The original government decree was intended to raise revenue for monthly allowances of 14 million LBP for active‑duty soldiers and 12 million LBP for retirees. LIMS has played an active role in campaigning against both the fuel tax and the proposed allowance increase.

LIMS considers the allowance itself unsustainable, given its ripple effect on other public‑sector employees. The promise of higher pay for soldiers will systematically spark demands from civil servants who cite the military’s preferential treatment as a benchmark. Many of these workers were recruited through patronage or sectarian considerations and contribute little to productivity. LIMS argues that true reform requires trimming the bloated bureaucracy—cutting half the workforce—to free up resources for rewarding productive staff, like military personnel, without increasing fiscal strain.

Prior to the 2019 crisis, Lebanon financed deficits by borrowing from the central bank, domestic banks, and international markets. With sovereign Eurobonds now in default, those avenues are largely exhausted. Pursuing wage or pension increases outside the budget merely shifts costs onto inflation, taxation, or foreign‑exchange reserves, further eroding economic stability.

Regarding the fuel tax, LIMS contends that Lebanon’s fiscal architecture should be overhauled rather than punctuated by ad‑hoc levies. Ineffective taxes—prone to evasion and uneven enforcement, such as income tax and tariffs, must be replaced with a coherent system of flat consumer duties. Only after the wholesale removal of distortive levies can a sustainable consumer tax be introduced, and this should happen within the annual budget process rather than through arbitrary additions.

In parallel, two major political parties have lodged separate appeals with the Council of State against the government’s decision to impose the extra fuel tax. The State Council’s July 16 suspension marks an initial victory while the broader debate over Lebanon’s fiscal future continues.

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