Beirut explosion: One Lebanese restaurant to redirect state taxes to aid efforts

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In another sign of the Lebanese people’s faithlessness in their state, a popular restaurant in Beirut announced that rather than pay tax to the government, it will donate the money to reconstruction efforts.

Entire swaths of Lebanon’s capital were left in ruin after the August 4 explosion at the Port of Beirut caused by 2,750 tonnes of ammonium nitrate stored at the port. Government negligence, however, was determined to be the deeper root cause of the explosion.

One Beirut restaurant, Em Sherif, will donate the 11 percent that it would normally pay as value-added tax to non-governmental organizations that are helping those who have been affected by the explosion.

Dany Chaccour, one of the restaurant’s owners, said the decision will justify the reopening of Em Sherif and be a message of solidarity with the community.

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“We have 400 employees, so we have to reopen, but with the surroundings [and] everything completely in ruins, we cannot open without doing something,” Dany Chaccour, one of Em Sherif’s owners, told Al Arabiya English.

The explosion claimed the lives of at least 178 people, injured about 6,000 others and left some 300,000 homeless, according to government figures.

The blast also left some property destroyed and damaged businesses across the city, including Em Sherif’s three branches. Damages to the hospitality sector were estimated to be $1 billion, according to Tony Ramy, the head of the Syndicate of Owners of Restaurants, Cafes, Nightclubs & Pastries in Lebanon.

“We as restaurant owners, what do we give? We give joyful moments, and we cannot give joyful moments while other people are suffering … This is why we decided – yes, we will open; yes, we will collect VAT; and yes, we will give the VAT to NGOs,” Chaccour said.

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The Lebanese state relies heavily on taxes as a source of budget revenue. In 2019, tax revenues amounted to 78 percent of total revenues, with 22 percent from VAT alone, according to the Finance Ministry’s Citizen Budget.

Following the explosion, many countries rushed to send aid to affected people. The Lebanese have urged countries and donors to donate directly to organizations and not to the government, citing the rampant corruption in the state.

“During this time, this money is needed somewhere else,” Chaccour added.

According to the VAT law, tax authorities send three warnings to those who fail to pay within the legal deadlines. Penalties may also be imposed on late payments or late declarations.

However, Chaccour stressed that the restaurant will continue to declare the VAT amount to tax authorities, but will not pay it.

A candlelight vigil held outside San Jose City Hall in San Jose, California, honor of the victims of the Beirut explosion, August 8. (Albert Karam)
A candlelight vigil held outside San Jose City Hall in San Jose, California, honor of the victims of the Beirut explosion, August 8. (Albert Karam)

“By the time we reach the final warning [to pay], the organizations and the country would be in a better situation. Either we get a special exemption, or we will pay the VAT [amount to the state],” he added.

Em Sherif’s initiative, which Chaccour said could be also adopted by other restaurants, could have legal repercussions on the involved businesses.

Karim Nammour, a lawyer and legal researcher with Legal Agenda, explained that withholding tax payment is usually considered a criminal offense.

However, the initiative could also be viewed as “an act of civil disobedience” since an action needs a criminal intention behind it to be considered an offense, Nammour said.

According to Nammour, the argument that the tax payer would rather use the money for public relief instead could be defendable in a court of law.

“It is a very commendable thing and a very defendable thing by law, and controversial, obviously,” he added.

Em Sherif’s administration called on several NGOs, including Impact Lebanon, Lebanon of Tomorrow and the Lebanese Red Cross, to reach out to the restaurant’s administration to coordinate the move.

Jessica Azar, co-founder of Lebanon of Tomorrow, praised the initiative, saying Lebanese people always “find a way to stand on [their] feet and help each other across different sectors to restore Beirut to the way it was.”

“We thank [Em Sherif] for [their] trust in us … It’s a really great and patriotic initiative that shows that Beirut does not die,” Azar told Al Arabiya English.

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Impact Lebanon also appreciated the initiative, saying that while “it is not in a position to comment on the manner in which businesses see fit to support the desperately needed relief effort on the ground, the intention is deeply appreciated, every little [bit] helps.”

As for other restaurants, the Syndicate of Owners of Restaurants, Cafes, Nightclubs & Pastries in Lebanon is set to meet next week and announce a series of measures to be taken by its members, the syndicate’s Secretary General Maya Bekhaazi Noun told Al Arabiya English.

Lebanon has been suffering a financial crisis and a sinking economy for years. Foreign aid pledged previously for the Middle Eastern country remains contingent upon fiscal reforms that the state has so far failed to implement.

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