Former Economy and Trade Minister Alain Hakim warned that recent government decisions to raise the value-added tax (VAT) and fuel prices could trigger widespread economic hardship, particularly for the country’s poor and middle classes.

Speaking to This Is Lebanon, Hakim described the government’s approach as “irresponsible” and lacking any clear financial studies.

“It is shameful for the State to take decisions that directly impact Lebanese citizens without evidence-based planning,” he said. “Unfortunately, there is no social responsibility; there is only social destruction, which the government is actively contributing to every day.”

Hakim said that increasing the VAT from 11 to 12 percent will directly drive inflation, raising the cost of most goods and services. He criticized government officials for downplaying the impact, pointing out that claims that the VAT applies only to certain items have been repeated for decades, yet the results are predictable.

“Every VAT hike in the past thirty years has led to a 20 to 30 percent rise in consumer goods prices,” he said.

He also warned that rising fuel prices would further inflate costs for transportation and production.

“Production costs in Lebanon are already among the highest in the Middle East,” Hakim said. “The government’s decisions will sharply reduce purchasing power, hitting the poor and middle classes the hardest, who bear the daily brunt of these policies.”

Hakim recalled the previous governments' “irresponsible” measures, including the 2017 financial reforms and the 2019 approval of new salary scales, which were eventually undermined by the collapse of the Lebanese pound.

“These decisions demonstrate a pattern of mismanagement, placing the burden on citizens while failing to address systemic inefficiencies,” he said.

He sounded a broader alarm about the economic consequences of the current measures.

“These policies will act as a barrier to Lebanon’s economy, slowing economic activity, reducing consumption, weakening domestic demand, and hampering trade and services,” he said.

Higher taxes on companies, Hakim added, could further depress investment, halt projects, and increase unemployment.

“The impact will be negative across the board, reflecting a complete lack of responsibility among decision-makers,” he said.

Hakim criticized the government for ignoring available reform options that could generate revenue without placing the burden on citizens. He said priority measures should include closing loopholes such as customs evasion, addressing idle state assets and maritime properties, controlling public spending, and supporting citizens instead of taxing them to cover state failures.

He also called for a comprehensive restructuring of the public sector.

“Today, there are three categories of employees: essential staff, unnecessary staff who still receive salaries, and employees who do not exist at all. The sector must be cleaned up, economic cycles restored, and transparent, efficient management implemented before any salary increases,” he said.

Hakim concluded that without these reforms, Lebanon risks further erosion of purchasing power, escalating economic hardship, and an ongoing cycle of mismanagement that undermines both citizens and the broader economy.