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Explained: Why Lebanon’s decision to tax calls through Internet triggered protests

While the tax proposal has since then been withdrawn, if it were to pass, Lebanon would be the first country in the world to do so. The move, however, has triggered mass anti-government protests in the West Asian country.

Written by Mehr Gill , Edited by Explained Desk | New Delhi | Updated: October 26, 2019 4:25:31 pm
Explained: Lebanese protest new tax proposal disrupting daily life As the protests enter their ninth-day, schools, universities and government institutions are still shut and major roads in the country continue to be blocked, for the protestors are demanding mass-resignation of the MPs ministers and the president, Michel Aoun. (AP Photo/Hussein Malla)

On October 17, the Lebanese government proposed a plan to tax calls made through the internet and other similar services, “as Lebanese continue to reel under the burdens of the economic decay and increased taxation, “ An-Nahar reported. Lebanon’s Information Minister Jamil Jarrah announced that Voice Over IP (VoIP) calls in Lebanon would be charged at 20 cents everyday, from January 2020 onwards, which totals to $6 per month. These VoIP services include calls made through Facebook, WhatsApp, Skype and Viber. Even so, the government did not figure out the way in which the taxation would be implemented.

While the proposal has since then been withdrawn, if it were to pass, Lebanon would be the first country in the world to do so. The move, however, has triggered mass anti-government protests in the West Asian country. As the protests enter their ninth-day, schools, universities and government institutions are still shut and major roads in the country continue to be blocked, for the protestors are demanding mass-resignation of the MPs ministers and the president, Michel Aoun.

Recently, mass protests were triggered in Chile over the increase in subway ticket prices. Like the protests in Lebanon, they too underlied deeper economic problems and public resentment against government policies.

Why are the Lebanese protesting?

Because of Lebanon’s ever-increasing budget deficit and high public debt in the last few years, the government has resorted to “unpopular and unsound measure of raising taxes, including income taxes, corporate taxes, value-added taxes and the tax on income earned from bank deposits,” An-Nahar reported. In January 2017, Aoun announced an increase in taxes to fund pay rises of public sector employees. In the years before 2017, the International Monetary Fund (IMF) had called for Lebanon to raise taxes spanning VAT, fuel, corporation and property as a solution to deal with the country’s growing public debt. After repeated delays and a three day strike by public sector workers for the tax increase and a protest by the public against the tax increase, the law was passed in October 2017.

While the protests were triggered by the government’s decision to put a tax on WhatsApp voice calls, the larger reason for the protests seem to be resentment that has built up over the years due to factors such as the economic stagnation, high unemployment, corruption, lack of trust on the government and the lack of public amenities in the country. These protests therefore, target the government’s fiscal policy and the country’s political class. Lebanon has one of the highest public debts in the world, at about 150 percent of its GDP, while the budget deficit is at 11 percent of the GDP. The remittances received from the Lebanese living abroad have also reduced.

In fact, on September 2, the government announced their plan to declare an economic emergency after ratings agency Fitch downgraded the country’s credit rating from “B” to “CCC”, signalling a stress on the country’s financing model. and to undertake some public reforms to deal with the growing debt and low economic growth. In another protest on September 29, participants demonstrated against the deterioration of their living conditions.

An opinion article published in the Lebanese newspaper An-Nahar says that the rising youth in the streets of Lebanon is the country’s “real asset” and that it is eager for a better tomorrow and access to the “minimum rights”. “He (the Lebanese citizen) is no longer satisfied with the current ruling class, and has genuine national cultural aspirations that he wants to translate through his academic scientific competencies and high degrees, while the current political staff is not on the same ambitious wave,” it says. It further states that the uprising wants to restore the “looted spirit of the Lebanese constitution”.

As per some reports, the protests also seem to be particularly targeting Gebran Bassil, President of the Free Patriotic Movement (Lebanese President Michel Aoun is the party’s founder) and the Minister of Foreign Affairs. On Friday L’Orient-Le Jour reported, “Bassil has been booed at protests across the country, including (or especially) in Christians areas and strongholds of his own political party. He has been the subject of insults and crude humor in many videos circulated on social media,”. For many Lebanese, Bassil is the symbol of corruption and communitarianism. As per the report, in the past few years, Bassil has been accused of making comments and remarks meant to divide the Lebanese public where there is a Muslim majority and Christians are a minority.

What has been the government’s response?

On Thursday Aoun, who took office in October 2016 addressed the Lebanese public through which he acknowledged the “lack of accountability” among those in power. In his address, he also referred to a draft law meant regarding the retrieval of “stolen” public funds, to be passed by the Lebanese Parliament. According to An-Nahar, there are several such draft laws that have not been passed, including a proposed law on combating corruption and one to make the finances of MPs and ministers transparent. “Your screams will not go to waste like all the screams before you that brought back all the liberties to Lebanon and I am willing to meet with representatives of the movement to exchange point of views,” Aoun said

The protestors were not convinced by Aoun’s address and continue to demand the present government’s resignation, to be replaced by a Cabinet made of technocrats. On Monday, Prime Minister Saad Hariri announced a series of economic reforms including a cut in politicians’ pay, investment in power plants and taxing banks to reduce public debt.

Why would the government tax calls made using VoIP?

The proposal for such a tax has ramifications in terms of the citizens’ freedom of using the internet. As compared to global VoIP service providers, government owned services are considered to be less secure in terms of data privacy, paving the way for “privacy violations across the board.” Significantly, messages and calls made through WhatsApp, for instance are encrypted end-to-end.

Earlier this year, a campaign group Electronic Frontier Foundation (EFF) along with mobile security firm Lookout traced a malware meant to access data stored in mobile phones to a Lebanese government building. “In the wake of the bombshell revelations illustrating the country’s state-sponsored spying activities – directed at its own people – Lebanon has now been thrust at the forefront of this discussion, joining a long list of nations that partake in such pervasive behavior,” An-Nahar reported at the time. WhatsApp, Twitter, Facebook and Telegram were likely used for implementing these security breaches.

According to Freedom House, a U.S. based NGO, an activist Ahmad Amhaz was detained for seven nights in 2017 for ridiculing politicians in a Facebook post. The NGO also mentions civil activists taking to the internet to protest against the high cost of mobile internet. Significantly, there is a possibility that the government is trying to maintain a monopoly in the telecommunications sector. At present, there are two mobile phone operators in Lebanon, and both are state owned. “Let’s say WhatsApp calls end up costing 6$ per month, the government would release a service that costs 3 or 4 dollars,” a representative from SMEX told An-Nahar.

Telecommunications sector in Lebanon

According to the Social Media Exchange (SMEX), a registered Lebanese NGO, cell phone prices are the fourth highest in Lebanon among the Middle East and North Africa (MENA) region, behind the UAE, Saudi Arabia and Yemen.

In January 2017, SMEX reported a one-day boycott of the two phone services calling the Telecommunications Ministry to cut down the costs of national and international calls and to eliminate the monthly fee that users of the two services have to pay to keep their phone lines active. As an alternative to these services, the boycotters called for the supporters of the campaign to switch to instant messaging apps over WiFi to text and make calls. According to research cited by the SMEX report, average monthly prepaid cellular packages in Lebanon amounted to about $25. Lebanon also has some of the worst internet speeds in the world. The Speedtest Global Index ranks Lebanon at 164 out of 175 countries when it comes to the speed of fixed broadband. It is ranked 30 in the mobile internet category. Even so, given the high cost of making cellular calls, VoIP services are a cheaper alternative for internet users in the country, with its popularity increasing.

78 percent of the Lebanese population uses the internet as of 2017, according to the World Bank. In 2018, there were about 44,00,000 cellular connections and 0.14 fixed broadband connections per 100 people. Lebanon has a population of about 60 lakh people.

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