Enab Baladi – Muhammed Fansa

Within about one month, the Syrian regime’s government issued several decisions to impose service or legal fees that flow into the state treasury, which raises the question about the reasons for this trend and its benefit to the ailing economy.

In early December, the head of the Syrian regime, Bashar al-Assad, issued Legislative Decree No. 37 of 2023, which allows, in accordance with the added paragraph of Article 26 of the Military Service Law (compulsory military service), those assigned to reserve service who have reached the age of 40 or over who have not yet joined service to pay a cash allowance for their legal duty in reserve service in the amount of $4,800 or its equivalent in Syrian pounds (approximately 67 million Syrian pounds).

This decree was preceded by another decree that granted conditional amnesty for “internal desertion,” provided that the person surrenders himself within three months, and for “external desertion,” provided that the person surrenders himself within six months, which gives the largest number of reserve defaulters the opportunity to apply to pay the cash allowance.

Also, at the end of last month, the People’s Assembly approved a law relating to the management and investment of movable and immovable funds confiscated pursuant to a final (non-appealable) judicial ruling, whether the ruling was issued before or after the entry into force of this law.

According to the new law, the Ministry of Finance will manage and invest movable and immovable funds confiscated under a judicial ruling, with the exception of lands located outside regulatory plans, where their management and investment will be for the Ministry of Agriculture. However, if the funds are a company, shares, or shares in a company, they will be managed by the Ministry of Finance.

According to Ghada Ibrahim, the rapporteur of the Constitutional and Legislative Affairs Committee in the People’s Assembly, the law aims to transfer confiscated funds frozen pursuant to a judicial ruling to the state to invest them in a way that achieves returns for the state treasury.

Ibrahim explained that “this money is confiscated from convicts proven to be involved in corruption cases or who took advantage of the country’s current situation and committed the crime of treason,” while the regime usually accuses its opponents of “treason” charges so that it can confiscate their property.

On October 29, al-Assad issued a law related to business and consular services fees, raising their fees to rates exceeding 100%.

Alternative fees for taxes

Rabie Nasr, economic researcher at the Syrian Center for Policy Research, told Enab Baladi that an economy that relies on taxes and fees always has a good side for the state’s general budget and is better than the economy relying on grants and aid or on natural resources.

Although advanced economies have high tax and fee rates that finance support policies, the governments of these countries are at the same time keen on rational spending and accountability by society for purposes that serve the public interest and development, according to Nasr.

The research fellow added that countries that deduct fees and taxes should also have an active, recovering economy that generates added values, so that taxes and fees are not used to stifle or harm economic activity, but rather as a tool to redistribute income towards development and help the most affected and poorest people.

In his turn, Mohammed al-Abdullah, economic research fellow at the Omran Center for Strategic Studies, told Enab Baladi that from the regime’s perspective, it is following a current policy that it began several years ago, which is implementing gradual steps towards covering the worsening financial deficit in light of an “almost paralyzed” economy as a result of the cessation of productivity.

The regime’s government is trying to search by various means and means for any possibility of supplying foreign currencies to the treasury in the first place and is trying to invest in anything that can be invested in a way that reduces the financial deficit in the general budget, according to the researcher.

Al-Abdullah does not believe that the regime is capable of imposing more taxes at the present time because the local community in Syria is suffering from a sharp decline in the level of income and high costs of living, so he may not resort to raising taxes in order not to raise “popular resentment” against it, and to try to benefit from imposing fees on Syrians abroad.

In the middle of this year, the average cost of living for a Syrian family consisting of five individuals, according to the Kassioun Cost of Living Index, exceeded the barrier of six and a half million Syrian pounds, while the minimum reached about four million and 100,000 Syrian pounds, making the size of the gap that separates the minimum wage from the ever-rising average cost of living very massive.

Regarding the reasons that brought the regime’s economic policy to this form, Nasr stated that it is represented by the state’s production deficit and dependence on imports after it lost its human capital due to military operations.

The regime then imposed laws and controlled the economy by an “elite group close to it,” and the volume of imports reached six times that of exports, which constituted a large deficit, demand for foreign currency, deterioration of the local currency, and an increase in prices.

Nasr added that the regime is moving towards imposing fees or taxes in foreign currency because imposing them in the local currency eats away at its real value.

Since the beginning of 2023, the pound has witnessed a significant decline in its value, losing about 100% in seven months.

The deterioration of the value of the pound and the accompanying significant rise in prices and weakness in purchasing power requires a large increase in salaries equal to the size of needs.

​​The US dollar is trading at 14,400 SYP according to the S-P Today website, which covers the trading rate of the Syrian pound to the dollar. At the start of the conflict in 2011, the dollar was trading at 47 pounds.

Unjustified measures that do not cover deficit

Omran’s research fellow, al-Abdullah, believes that the decision to invest confiscated funds aims for the regime to benefit from anything available to it so that it looks at the possibility of using these funds or confiscations to benefit from them and invest them in a specific field in a way that generates a return that covers part of the budget deficit.

Al-Abdullah estimated the revenues currently entering the treasury as “almost non-existent” in light of this deteriorating economic reality, describing the procedures related to imposing fees as “a last ditch effort.”

For his part, expert Nasr considered that the fees imposed on passports came after people were forced to immigrate, and at the same time, they were being blackmailed by saying that in exchange for this migration, they must pay a fee “in the form of a royalty” at ridiculous prices.

The Syrian passport is the second worst passport after Afghanistan, according to the Passport Index website, which specializes in comparing passports based on the number of countries to which its holders are allowed to travel without a visa. However, the Syrian passport is one of the most expensive passports in the world.

Nasr described imposing a reserve service allowance as “blackmail” for those who do not want to participate in fighting with the regime forces by taking “very high” fees from them in hard currency to finance the huge deficit in the general budget.

The economic researcher believes that all these fees do not constitute sufficient revenues to cover the ongoing deficit.

Similarly, al-Abdullah believes that the fees will not significantly enrich or achieve the goal that the regime aspires to in trying to cover the deficit or increase foreign exchange, but they are limited amounts that he can still rely on in light of his loss of hope until the present time, in the absence of any political solution or international support that aims towards its continuation or survival.

Nasr believes that the biggest problem with the continuation of the policy of imposing fees is that it gives indications to the future that this authority continues with the same mentality that stifles the productive sector within the country and reduces demand in front of supply because it imposes fees on the population to get rid of military service or to immigrate, which will force the people to sell their remaining property or savings to achieve this goal.

According to a study entitled “Increasing salaries: The regime’s policy driving the militarization of society,” published in November 2022, the regime’s government has for decades used the method of indirect taxes to finance increased salaries and wages, and they are imposed on petroleum products, cement, and fertilizers, in addition to mineral oils and other products. These taxes are called “price differences” because the public institutions that market these materials transfer the amounts directly to the Ministry of Finance.

Raising energy prices contributed to financing the increase in salaries and wages and thus increased the costs of Syrian products and service prices. This increase led to a reduction in the ability of Syrian industry to compete in the national and international markets.