0.9% solidarity tax on Lebanon's wealthiest would save millions from poverty

Lebanon has 6 million residents. 2.7 million live in poverty, 1.4 million in extreme poverty. 6 are billionaires.

Right after recording Episode 4 of Platform Enterprise, Lisa Luxx rushed off to give a supply of nappies to a single mother struggling in Beirut. In the episode she discussed in detail the micro-economy she and other activists are building on the ground in Beirut in a bid to combat the terrible poverty afflicting its citizens. 

The situation is a national crisis. People all over Lebanon are sinking into permanent poverty thanks to a suffering economy and political instability. The downward spiral of the Lebanese economy came to a catastrophic liquidity crash in August 2019. This ongoing financial crisis has only been compounded by the COVID-19 pandemic and the terrible Beirut Blast in August 2020 that killed over 200 people.

Over half of the population in Lebanon now live in poverty, with 23% living in extreme poverty compared to 8% in 2019. 1.5 million Syrian refugees have found shelter in Lebanon since 2011, and the UN estimates that nine out of ten Syrian refugee families live in extreme poverty. Half suffer from food insecurity—in other words, they miss a daily meal.

But poverty could be eradicated in Lebanon by its wealthiest citizens. The Gini coefficient, a measure of wealth inequality, puts Lebanon at 81.9%, making Lebanon one of the worst countries for income inequality in the world. The top 10% of adults rake in 25% of the nation’s GDP and, shockingly, the top 0.1% make the same as the bottom 50%. That’s 3000 people sharing the same wealth as over two million. 

The United Nations Economic and Social Commission for Western Asia analysed Lebanon’s income inequality in a recent report. ‘Wealth distribution and poverty impact of COVID-19 in Lebanon’, published in July 2020, found that a solidarity tax on the nation’s wealthiest 421 individuals would close the poverty gap. The suggested tax rate was a mere 0.9%.

The report states: “The wealthiest 10 per cent of adults would barely feel the cost of closing the regional poverty gap.” 

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But for the majority, life in Lebanon is demonstrably more difficult. Hyperinflation has driven up prices of the most basic necessities, with food increasing by 374% between October 2019 and October 2020. Sanitary products increased by 500% and now 66% of adolescent girls in Lebanon cannot afford pads. Volunteer organisations have been handing out ‘dignity packs’ filled with assortments of sanitary products to combat period poverty.

Child labour is also on the rise. The number of children engaged in child labour increased from 2.6% in 2019 to 4.4% in 2020. Forced agricultural labour is one of the worst forms of child labour, along with tobacco farming, construction, sexual exploitation and recruitment into armed conflict. Children in Lebanon are at risk to this and many more forms of exploitation in Lebanon. As poverty climbs and families struggle to put food on the table, less and less children are able to attend their online classes.

Some families resort to sending their children to work. This is known as an “emergency level” coping strategy. 68% of female-headed households facing food insecurity engage in “emergency level” and “crisis level” coping strategies, compared with just 13% of male-headed households. Other “emergency level” coping strategies include begging and accepting high-risk jobs. “Crisis level” coping strategies include marriage of children under the age of 18, selling productive assets, withdrawing children from school, and reducing expenditure on education and health. 

Education is one of the biggest preventions against child labour, but the pandemic necessitated the closure of public schools in March 2020, but insufficient internet access makes children’s access to remote learning precarious. A digital divide was already present in Lebanon, with one third of the 35% of students who rely on remote learning unable to access their lessons. 

Even before the pandemic, education was inaccessible to many children, particularly Syrian refugee children. In 2019, Lebanon’s government improved the access to education policy by allowing all refugee children to enrol in schools, regardless of whether or not they had the correct documentation. But barriers such as inaccessibility, violence, discrimination, and bonded labour remain—many Syrian families in the Bekaa Valley live in bonded labour, working on farms to pay back the makeshift dwellings provided by farmers. It is estimated that 75% of Syrian children working in the Valley do so in agriculture.

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This is not the legacy once imagined for Lebanon, home to Beirut, ‘The Paris of the Middle East’. A middle-income country, and the beating heart of feminism in the Arab region, 65% of Lebanon’s population belonged to the middle class until recently. But that middle class has largely disappeared due to a series of crises coupled with too much government spending and too little policy reform. Lebanon is now in talks with the IMF and hopes to seek a bailout to the tune of a $9 billion loan. It also recently asked Europe to release the $11 billion funding promised back in 2018, but the international community is wary of paying out in the absence of reforms that could tackle corruption. 

Despite being impacted by the pandemic, the wealth of the top decile—the top 10%—in the Arab regions remains around $1.3 trillion. The cost of closing the region’s poverty gap cost $12.9 billion in 2019 and increased to $15.6 billion in 2020 due to COVID. A recent UN report stated that by introducing a solidarity fund in the seven middle-income countries in the Arab region, the sum required to close these countries’ poverty gaps now, post-COVID, would be just 1.3% of the top decile wealth.

Billionaire’s wealth alone in the Arab region, at $92 billion, is more than double the annual budget required to end poverty throughout the region: $38.6 billion pre-COVID and $45.1 billion post-COVD. 

Lebanon has six of these billionaires who have a combined wealth of $13 billion, 22% of the GDP. Comparatively, the national poverty gap is $838 million.

The state of inequality in Lebanon should serve as a warning for Western nations, who have seen millions of their own citizens flung into a state of insecurity due to the pandemic. Joblessness, homelessness and poverty afflict residents of even the wealthiest countries, all whilst the pockets of the richest are deepened and lined with absurd wealth. Yet, despite their inordinate resources, the wealthy decline to dig deep; exploitation is a right without duty.

The UN’s suggestion of a meagre solidarity tax has been ignored in Lebanon, of course. It seems the top 10% of adults don’t feel a thing, even when millions suffer, even when children labour, even when families starve.

If we do not address the corrupting influences of money and power governments will continue to kowtow to the individual’s right to amass extreme wealth. Simply put, we cannot expect to build a sustainable society by protecting those who do not care for the welfare of others. To do so would see the planet burn and billions suffer. As they already do.

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