Citizen's guides: awareness series on tax and financial transactions
Institute of Finance of Lebanon - Basil Fuleihan Institute
Lebanon

The Problem

The Transparency and Accountability Grants (TAG) Project was launched in March 2001 by AMIDEAST-Lebanon with funding from the United States Agency for International Development (USAID). TAG supports local initiatives and activities which increase good governance, transparency, and accountability within Lebanon.
TAG grants represent a step in promoting an open and transparent environment in which Lebanon can thrive and prosper. They are intended to both complement and strengthen the governments' efforts to reform the administration and build a strong economy. They also help mobilize competent organizations to contribute their efforts and expertise in building a more open and transparent society.
The active and informed participation of citizens is a key component for successful reform and progress.

For the past few years, AMIDEAST was able to initiate several successful projects with the Ministry of Finance (MOF), in cooperation with the Institute of Finance. The Ministry was the first public institution to approach the Transparency and Accountability Grant project (TAG), in its first year, 2001, to see how AMIDEAST could help.
Since then, the Ministry has become a frequent partner, with more than 6 projects to date. We value the relationship that has developed with the Ministry of Finance and specifically the Institute of Finance.
Access to information and its dissemination was maximized in a wide range of services provided by MOF to the general public. By doing so, the Institute increased transparency of all transactions and operations at MOF, and promoted further the accountability of the public sector employees and their commitment to deliver better public service.
This cooperation has demonstrated that there is a committed Lebanese constituency willing to work hard and creatively to address information communication and transparency issues successfully.

Solution and Key Benefits

 What is the initiative about? (the solution)
Information vehicles that provide citizens with reliable sources of information to successfully conduct key transactions at the various public administrations are scarce in Lebanon. When found, they are often written in a legal language and are not user-friendly tools. As a result, citizens avoid dealing with administrations, and prefer to rely on middlemen. This practice engenders high cost, corruption, distrust among parties concerned, and most of all reluctance of citizens to learn about their rights and obligations or demand better services.
To remedy this situation, and in the context of the overall institutional reform needs of the Ministry of Finance, the Institute produced, over a period of five years, 5 financial and fiscal awareness guides destined to the public at large. These guides were funded by USAID under the Transparency and Accountability Grant (TAG) project managed by AMIDEAST-Lebanon:
• Inheritance and Land registration guide: Inheritance and land registry procedures at the MOF are key transactions for all Lebanese citizens and can be very confusing for all but the most sophisticated citizens;
• Income Tax guide for Liberal Professionals: the MOF efforts to enforce collection of Income tax from professionals created a lot of confusion and debate between the ministry and the professionals (members of syndicates as well as independent workers);
• Built Property Tax Declaration and Payment guide: any citizen in Lebanon who owns a built property or rents one on commercial basis is subject to a tax and needs to know about the attendant requirements;
• What Citizens should know about the Stamp Duty: the stamp duty in Lebanon is not only little known, but also frequently misunderstood, although it has to be paid by all residents in Lebanon on most signed documents produced in Lebanon and the none compliance penalty can reach 10 times the amount of the tax value.
• Retiring from Civil Service: Where to go? What to do?: by understanding their rights and responsibilities, retirees can be assured that their requirement benefits are not lost or minimized due to bureaucratic confusion.

The purpose of these guides is thus to raise the awareness of citizens to their rights and obligations, encourage them to comply by the rules, avoid penalties for non-compliance, and demand a transparent and fair treat from the administration.
Our objective is therefore to empower citizens by providing them with targeted and comprehensible information tools.
On the other hand, higher compliance rates and improved relationship with citizens would help the administration improve its services and standardize its qualities, collect more accurate information on each transaction, and make better decisions as to the cost and feasibility of managing the taxes.
Following this information dissemination and transparency effort, more confidence in the tax administration was felt. The overall positive public reaction to the guides (detected in the opinion surveys that followed each guide distribution), demonstrated that they were instrumental in clarifying procedures for the citizens and thus narrowing the gap between the citizens and the finance Administration.
(More details in the “Changes resulting from achievement(s) paragraph).

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
Work on the "Inheritance and Land Registration Transactions" Guide started on 7/11/2001 and was not accomplished until 2/4/2002. 30,000 copies were printed in February 2002, however, following the exhaustion of the initially printed quantity and the introduction of new amendments to the Inheritance Tax law and procedures in 2003, 30,000 additional copies were printed in January 2005. 42,405 copies have been distributed to date.
Work on the "Income Tax Declaration for Liberal Professionals" Guide started on 2/9/2002 and completed on 13/2/2003. The 50 copies printed in July 2003 were distributed in less than two months. A second print of 50,000 copies was necessary in order to cater for the increasing demand on this guide. In addition to publishing the Arabic and English versions of the pamphlet on the IoF website, 12,000 copies of the English version of the guide were also printed of which around 10,000 copies were distributed via a leading monthly publication: Lebanon-Opportunities. A second printing of 30.000 amended copies is currently in process.
The 56 pages guide "Built Property Tax Declaration and Payment" was started on 3/2/2003 and issued in 7/7/2003. 60,000 copies were printed in October 2004;
Whereas the 52 pages guide "Retiring from the Civil Service: Where to go? What to do?" was started 10/11/2003 and issued on 9/1/2004 printed in 80,000 copies in October 2004.
The "What You Should Know about the Stamp Duty" Guide started on 1/7/2003 and was issued on 5/1/2004 was printed in 60,000 copies in November 2004.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The public often complained about the hurdles involved in completing key transactions at the various public sector administrations, and specifically at some departments of the Lebanese Ministry of Finance MOF.
•Help desks were rare, and citizens were faced with the lack of simple, reliable, and readily available sources of information that would help them successfully conduct key transactions at the various public administrations.
Such information includes documents required (pre-required legal documents), submittal process (address, location, office, etc.), time needed for completion, authorized signatures, fees as specified by regulations, etc.
•Complex tax laws, regulations and procedures, which often change and leave room for tax inspectors to always find mistakes and penalise the taxpayer;
•A general perception that the fiscal administration intends to get as much money out of the taxpayer as possible instead of providing proper advice (the negative public perception is based partly on personal experience and partly on impressions gathered from the social environment and the mass media): tax payers are therefore “afraid” of MOF and avoid contact, even to ask information;
•Some staff and middlemen still applying corrupt practices.

MOF wishes to expand its communication efforts in order to acquire the public's support to its policies and reform projects and in order to change the negative public's perception of the fiscal administration and reduce the gap between the two parties.
In fact, despite the modernization efforts, the lack of proper communication is participating in the prolongation of the deeply rooted mistrust in the administration and lack of confidence in its problem solving capacity. Providing citizens with useful and transparent information and tips on ways of fulfilling their transactions at MOF, and thus empowering them, will largely contribute in restoring their trust in the fiscal administration and will encourage them to practice their citizenship and comply by the rules.
As the Ministry’s training and communication agency, the Institute of Finance IOF is committed to assisting MOF in devising and implementing an effective communication and public awareness strategy to support the reforms undergone and to improve MOF internal and external communication capabilities.
As part of its role as the change agent at the Lebanese MOF, and concurrent with the effort of MOF to improve service to citizens and promote an environment of transparency, IOF engaged in an ambitious project: the production and distribution of a series of Citizen Guides. It hoped to play a major role in promoting ethical conduct and a culture of transparency at the Ministry’s various departments.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
The Institute’s objective was to reinforce the efforts undertaken by MOF aimed at raising citizens’ awareness to their rights and responsibilities, promoting an environment of transparency and accountability in what concerns the application of rules and procedures at the Ministry’s various departments and facilitating communication with the public at large.
By providing the public with an official, user friendly and easily accessible tool, compliance to rules was encouraged and transparency of transactions promoted.
IOF believed that by raising people’s awareness to their rights and obligations, MOF could come closer to establishing a relationship of transparency and accountability with the public, build confidence of citizens in the state, and promote self declaration and compliance.
The need for the production of such pamphlets was indeed evident as statistics compiled since 1999 by the Income Tax Department at MOF revealed a large non-compliance rate and errors in tax declarations.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
Prior to the launch of the project, consultations were undertaken by IOF with MOF officials. They confirmed a large non-compliance rate and/or errors in tax declarations, large costs incurred by citizens due to delays in payment, to non-compliance and other reasons attributed to the lack of sufficient information about taxes and financial transactions.

Seeing the guides' sensitive content, IOF wanted to ensure that various stakeholders were involved throughout the process. Expert consultants were selected from among civil servants who served the Ministry for several decades: the purpose was to benefit from their expertise and first-hand experience since they were involved in the daily work and know the problems and possible solutions.
Drafting the pamphlets required the joint expertise of one or more senior officials in an effort to describe and define each task in detail. Data collection involved desk reviews of primary data sources (relevant laws and related modifications); field visits to concerned departments; site visits to scrutinize processes in the capital (Beirut) and in each of the five regional offices of the Ministry; and interviews with concerned officials (heads of departments, heads of regional offices, lawyers, other specialists, etc.). Furthermore, to ensure validity and reliability of the data, the team conducted field visits, and meetings and interviews with concerned officials to verify previously collected information.

The guides had to be useful, practical and appealing. They had to contain simple and direct messages. They also had to offer a vision of the whole processes involved and details on each step in a manner that would be accessible to the laymen.
The drafts were therefore many times reshuffled. The several reviews led into rewriting a number of sections in a more simple language.
Practical examples and quizzes were successively introduced to illustrate ideas.
The design and layout also played an important role in rendering the text more user-friendly.

The guides were printed in large quantities, and in two colors; posters were designed and distributed to support the promotional campaign. In order to attain their aim, the guides had to reach the largest number of concerned citizens. Preceded by a launching event, an exhaustive marketing plan was also devised taking into account the fact that the guides had to be displayed in all possible pertinent locations.

At the end of each activity, a short opinion survey composed of a number of close ended questions was conducted at relevant offices in MOF and help desks to measure the efficiency of these pamphlets as an informative tool.

The projects were executed as per the detailed planning described in the proposals submitted to AMIDEAST with some modifications and delays that occurred during the execution phase. Such risks were however foreseen by the Institute, reported to TAG and hence smoothly handled. The projects were easily adapted to the modifications that occurred to the laws and work processes encountered during the execution phase.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The first and most noticeable change resulting from the publication of the guides was the empowerment of citizens. They were much more aware of their rights and their obligations. Their ability to monitor and analyze government processes was clearly increased. This was noticeable from the attitude and behavior of citizens at the tax help desks. Knowledge made people aware of what they are allowed to ask for, and where and how they could complain, etc. This in turn made civil servants more prudent and responsive to publics’ calls as they were accountable for the information they provided to the citizens.
Opinion surveys undertaken by IOF confirmed this observation. The guides’ impact was reflected in a larger compliance rate to tax obligations (please refer to the table below highlighting the increase of tax registrations following the publication and distribution in 2003 of the Income tax guide).As a result of the initiatives, a decrease in the number of middlemen accomplishing transactions on behalf of citizens at the Ministry’s various departments was witnessed. More citizens showed up at the concerned departments to carry on their own transactions.

Registered Taxpayers:
Date: 31/12/02 31/12/03 31/12/04 30/4/05

Liberal professionals:
24026 33651 40526 41853

Companies:
56380 60677 66896 68820

Total 80406 94328 107422 110673

Taxpayers, and in particular liberal professionals, were more aware of their rights and duties as evidenced by their increased interest in seminars and training workshops organized at IOF. IOF received a large number of requests from syndicates and professional groups for organizing such awareness and information sessions.
The office of the Lebanese Minister of State for Administrative Development (OMSAD) welcomed and commended the publication of the guides especially, the one pertaining to inheritance and land registration transactions. As a result, OMSAD appointed a committee to review related procedures and propose measures to simplify and reduce steps involved.

Finally, the most significant change resulting from the publication of the guides was the initiation of a process of change within MOF. This was clearly witnessed in four areas:
1. The standardization of approaches and practices at a given department including standardizing the application of laws and procedures in the different regional offices, since the guides were communicated to the Ministry’s departments as ministerial circulars to which employees had to commit.
2. The development of MOF first Tax Procedure Code TPC. TPC is considered to be a first and historic achievement leading to harmonization of all taxes, simplification of tax procedures, streamlining deadlines and fines resulting from delays or non-compliance, etc.
The committee that was entrusted with the development of TPC was mainly composed of contributors and reviewers of the guides’ series.
TPC has been approved by the Council of Ministers and is currently being discussed in Parliament in view of passing the related law.
3. The reorganization of work at the main departments and the introduction of citizen help desks.
4. The initiation by a number of departments namely the cadastre and land registry directorate, the Deduction at Source of Salaries bureau and the Large Taxpayers bureau of a similar process leading to the production of similar guides that cater not only for the citizens’ needs but also adding the need for these departments to harmonize and standardize work internally and to create easy, user friendly and simple to follow tools.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
The effort invested in the production of the guides was similarly invested in their distribution. A successful advertisement campaign was carried out to ensure guides are adequately disseminated on the widest possible scale. This was key to the sustainability of the project, and its chance of replication in other public entities.

It was hoped that the publication of the guides’ series would generate demand by the public for more information/transparency, and that this would in turn push government entities to dedicate more time and effort to the citizens' rights to be informed.

The advertising and publicity campaign was composed of several activities organized by the Institute of Finance including:
• Press-conferences to launch the guides;
• Pre and post event press releases in major Lebanese newspapers;
• Distribution of nearly 130 thousand advertising flyers ;
• Articles in the press
• Interviews on TV
• Introduction letters sent to major stakeholders and signed by the Minister of Finance;
• Distribution of guides with the Ministry of Finance newsletter, “Hadith El Malia”;
• Distribution of guides at annual book fairs, i.e. the Arab Book Fair and “Lire en Français et en Musique”;
• Publication of the guides in an electronic version in 3 languages on the Institute and Ministry’s websites.

Moreover, and to reinforce the project’s sustainability, the Institute organized seminars and workshops that answered specific questions concerning the guides' content. For instance, workshops and round-table discussions were organized in cooperation with major syndicates, namely the Syndicates of Lebanese Accountants and the Syndicates of Engineers. A number of similar sessions were also addressed to public administrations, public enterprises and municipalities, upon their request. Weekly visits of university students to the Institute were jointly organized with a local NGO (YMCA), whereby visitors were introduced to the Lebanese tax administration and to the goals and importance of the citizens guides.
The booklets were periodically updated, resulting in new printed versions for the first two guides issued, namely the "Inheritance and Land Registration Transactions" and the "Income Tax Declaration for Liberal Professionals" guides. The new versions contained updates introduced by new laws and additional information.
The guides’ positive impact was further highlighted by comments collected from the opinion surveys and discussion meetings that followed the guides distribution inviting other departments and governmental institutions to produce similar guides addressed to citizens.
In addition, in the year 2003, the IoF participated in the transparency, accountability and good governance regional conference organized by AMIDEAST. The conference was an opportunity for the IoF to expose its experience and therefore transfer its expertise to other local and regional public administrations and institutions who would like to initiate such projects.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
The guides were based on laws and practices which dated from 1959 and were seldom updated. They were on many occasions unsuitable and inadaptable to modern times and economic activity. Moreover, this project was undertaken at a time when the Lebanese Ministry of Finance was undergoing major reform programs in all its departments. Changes and modifications were constantly introduced by budget laws and tax laws which brought major changes to the contents of the pamphlets.

The Institute was fully aware, before starting the project, of the difficulty of collecting and summarizing information due to the large number of data sources and the multitude of interpretations for a single text in addition to practices brought by years of war and isolation (legal texts, in-service notes and memorandums, diverse practices at the concerned departments, etc.).
Given the above described circumstances, the texts of the guides were reviewed by a large number of the ministry’s senior officials and tax experts from outside the Ministry in order to validate their content. This lengthy process created major delays to the overall production process.
Two foreseen challenges were faced by the Institute of Finance concerning the accessibility of the guides to the public at large. First of all was the challenge of reaching a satisfactory level of accessibility to the public in terms of “user friendliness”, i.e. replacing highly technical texts by a “user friendly” language, accessible to the layman. The second challenge was the distribution of the guides to all MoF offices and post offices in order to reach a satisfactory level of accessibility to the public at large.

Nevertheless, the most significant challenge was the introduction of a new approach in the Lebanese public administration based on new paradigms whereby citizens have the right and duty to hold civil servants accountable for their actions and the information they provide. From now on, citizens are considered clients with a full fledged right to get free access to information, and where information is no more the monopoly of the lucky few.

The many opinion surveys conducted after the production and distribution of each brochure were instrumental in better planning the next guide and reaching the public. For instance, suggestions made during the evaluation process of the first guide stressed on the need to include more numerical and practical examples as well as case studies, essential in clarifying the procedures. This was taken into consideration in all other guides and reprints.
Most responses also highlighted the need to update, on a periodical basis, the information contained in the guides.
Finally, citizens and taxpayers recommended using mass media, such as short TV spots or documentaries to advertise and build public awareness on the guides and ensure a wider circulation.

Contact Information

Institution Name:   Institute of Finance of Lebanon - Basil Fuleihan Institute
Institution Type:   Government Agency  
Contact Person:   Lamia El Moubayed Bissat
Title:   Director  
Telephone/ Fax:   +961 1 425147/9 - +961 3 377499
Institution's / Project's Website:   +961 1 426860
E-mail:   lamiam@finance.gov.lb  
Address:   512, Corniche Al-Naher
Postal Code:   16-5870
City:   Beirut
State/Province:  
Country:   Lebanon

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