The adoption of a stimulating and well-thought-out economic and tax plan by any country significantly influences the volume of foreign investment it attracts. Such a plan encourages foreign investors to study the market, assess its suitability for their activities, and determine the economy’s capacity to absorb their investments.
For example, high taxes on wages, profits, and net revenues tend to deter foreign investment, pushing investors towards markets with lower tax rates. Conversely, countries that have implemented stimulating economic plans and reduced tax rates on corporate capital and net revenues have successfully attracted both emerging and large companies. This influx of investment has led to mutual benefits for both the investing companies and the host country’s economy. Lower taxes reduce the cost of doing business, making these countries more attractive to investors, which in turn spurs economic growth, creates jobs, and increases government revenues in the long term.
The Lebanese economy traditionally relies heavily on tourism. However, the ongoing economic and financial crisis, coupled with the collapse of the Lebanese pound’s exchange rate, has led to a decrease in imports across various productive sectors, especially industrial and agricultural ones. Consequently, there has been a greater reliance on local industries. This shift has increased the business volume of industrial companies and boosted exports, particularly of local wine, to foreign markets. The resilience and adaptability of Lebanese industries highlight the potential for growth even in challenging times.
Despite the current crisis, Lebanon must seize this opportunity to develop a stimulating economic plan for its various productive sectors. By implementing favorable tax policies and creating a business-friendly environment, Lebanon can attract both local and foreign investments. Such a plan would help revive and attract inward investments, fostering competition among companies, lowering prices, and ultimately stimulating rapid economic growth. Additionally, a well-crafted economic strategy could lead to the diversification of the economy, reducing reliance on any single sector and enhancing overall stability.
By encouraging investment and supporting local industries, Lebanon can create a more robust and dynamic economy. This approach will not only help the country recover from its current crisis but also lay the foundation for sustainable long-term growth. It is crucial for policymakers to recognize the importance of a balanced tax policy that supports business growth while ensuring adequate revenue for public services and infrastructure development.