Jad El Dilati is a governance and human rights practitioner focused on Lebanon and the MENA region. He is currently a Bassem Sabry Democracy Fellow at The Tahrir Institute for Middle East Policy and the manager of the MENA and Syria programs at Minority Rights Group. His work focuses on civic space, accountability, minority rights, and governance across the region. His writing has covered conflict, governance, and the lived experiences of marginalized communities in Lebanon, with a focus on South Lebanon. Instagram: @jdilati
In February, while announcing new efforts to collect over a $1 billion in unpaid taxes from quarry and crusher operators, Lebanese Prime Minister Nawaf Salam said, "Collecting these funds is not guaranteed because many of the quarry owners are among those with influence." The remarks followed the government's February approval of a value-added tax (VAT) increase from 11% to 12% and a 300,000 Lebanese Pound ($3.30) hike in gasoline prices, steps taken to raise funds for temporarily increased public sector salaries. Both decisions reveal the contradictions in Lebanon's reform efforts amid war between Israel and Hezbollah: The government expects ordinary citizens to bear unequal costs while providing little in return at the expense of its effectiveness and legitimacy.
At its core, state legitimacy relies on a functional social contract: a reciprocal relationship in which citizens pay taxes and the government provides services, protection and equal rule of law. In Lebanon, however, this reciprocity has collapsed not just because services are weak or nonexistent, nor because elites evade enforcement, but because both conditions reinforce each other. Lebanon's crisis is fiscal but also one of reciprocity and asymmetry in policy implementation across society.
This imbalance is not new, but it has worsened since the country's economic crisis emerged in 2019. Successive governments have adopted similar policies targeting working citizens while avoiding confrontation with political and economic elites sustaining the system behind Lebanon's problems. Since 2019, wage earners have endured the rising costs of this collapse while impunity for influential elites grew, all as the Lebanese people have struggled through Israel's invasion of southern Lebanon in its war with Hezbollah since September 2024 and up to today.
The Lebanese state takes from its citizens through taxes and tariffs while essential services those revenues should fund are either missing, privatized at citizen expense or reserved for those who can afford alternatives.
- Jad El Dilati
When Beirut announced the fuel and VAT hikes, the public anger that followed was expected following previously instituted austerity measures intended to rebuild state revenue and decrease budget deficits. Lebanese view the decision as an extension of these previous measures from former governments: hikes in import tariffs in an import-dependent country; multiplied telecom bills overnight; increased and dollarized public service fees, including state electricity and generator fees; and elevated municipal taxes. All have worsened the country's cost of living crisis, transforming Lebanon into one of the most expensive countries in the Middle East and North Africa.
Yet these consumption taxes have not stabilized public finances, instead leaving a disproportionate impact on the population. Fuel price increases usually raise transportation and production costs, subsequently inflating the price of goods and services. This causal relationship manifests across daily life, especially amid the regional war. Food prices, for example, have increased 260-fold since 2019, despite the exchange rate stabilizing since August 2023. The conflict-driven rise in international oil prices and existing Lebanese energy policies have similarly surged fuel prices by up to 57%, further increasing the cost of essential goods.
Higher telecommunications tariffs and administrative fees have similarly increased the cost of everyday economic activity, leaving the poorest households with the bill while wealthier, politically connected Lebanese remain free of progressive taxes. This contrast is not new, but the addition of new layers exacerbates it: Average citizens are asked to bear greater costs while receiving less. Yet the state swiftly raises indirect taxes while failing to quickly and visibly restore services. The gap in reciprocity has never been wider.
Infrastructure shortcomings are particularly notable in this context. While electricity costs are among the highest regionally, the Ministry of Energy fails to provide over four hours of electricity per day, even after spending $40 billion to modernize the sector. This negligence has forced families to resort to private generators, consuming 44% of their monthly income while empowering a politically protected private "generator mafia" that charges soaring fees and operates beyond state regulations.
Road infrastructure is dilapidated. Limited investment since 2019 fostered one of the deadliest years for Lebanese drivers in 2025, with 162 deaths in just five months. Near-daily fatal crashes continue in 2026. Israel's destruction of key bridges and transport routes across southern Lebanon will worsen road safety by forcing traffic onto damaged, overcrowded and poorly maintained alternatives.
In Lebanon, citizens understand that their sacrifices are unfairly distributed. Their relationship with the government is non-reciprocal, breaking the social contract while destroying faith in a state that cannot defend large portions of the population from Israeli aggression.
- Jad El Dilati
In North Lebanon's Tripoli, home to Lebanon's richest two men — including former Prime Minister Najib Mikati — 45% of the population lives in poverty. Four buildings collapsed in the first five weeks of 2026, killing 14 people in a tragedy Amnesty International described as the direct result of "years of state mismanagement and entrenched corruption" and a lack of social protection spending.
The common thread is clear: The Lebanese state takes from its citizens through taxes and tariffs while essential services those revenues should fund are either missing, privatized at citizen expense or reserved for those who can afford alternatives. Policymaking selectivity, in which the average Lebanese citizen increasingly carries the government's burden, constitutes a reactive approach that reinforces the status quo and fails to address root causes of Lebanon's ills, including elite state capture.
Hopes were high for a shift from consumption taxes and toward structural reform and enforcement with the formation of a reform government in 2025. Yet Lebanon's 2026 budget relies overwhelmingly (87%) on regressive taxes to generate revenue, while returns from the crushers and quarries sector, which owes the state over $3 billion, remain absent from the budget's revenue framework. As a result, revenues from income and property taxes accounted for less than 20% of the total budget.
Emergencies have further exposed the Lebanese government's inability to provide protection and services, especially to internally displaced people (IDPs). Early during the 2024 Hezbollah-Israel war, hundreds of thousands of IDPs relied on non-governmental organizations (NGOs), not the government, for assistance. Relevant ministries could not provide bedding, food, water or hygienic supplies. Today, the government's response has been equally subpar, allocating a mere $50 million to support more than a million displaced people — averaging roughly $50 per IDP — between March 2 and May 23.
This dynamic plays out more broadly in Lebanon's economic meltdown. When banks closed their doors on Oct. 17, 2019, regular depositors could not access their savings. Yet $1.6 billion left the country from a few accounts belonging to politically and economically influential elites in the first few weeks of the crisis. Six years later, depositors continue to fight for their savings, demanding a legal framework that holds accountable those responsible for the transfers. Instead, the government approved a new "gap law" in December 2025 that, among other flaws, makes banks responsible for covering only 40% of withdrawals, despite their leading role in causing the financial crisis.
Undoubtedly, the current government is reformist and more efficient than its predecessors. Tax collection is also crucial to any functioning social contract and state. However, legitimate reforms and an effective social contract require state legitimacy. For reform to succeed, citizens must comply voluntarily, even if they disagree with decisions. Legitimacy is necessary for that compliance, but Lebanese must first believe that the state will incorporate burden sharing and good governance.
However, in Lebanon, citizens understand that their sacrifices are unfairly distributed. Their relationship with the government is non-reciprocal, breaking the social contract while destroying faith in a state that cannot defend large portions of the population from Israeli aggression. That evolution makes legitimacy impossible, producing disastrous consequences: widespread tax evasion, emigration of skilled workers, distrust in state institutions and, most alarmingly, the creation of alternative loyalty to political parties, militia leaders, informal service providers and NGOs.
A social contract requires two signatures, but for a long time, only the average Lebanese citizen complied. The success of Lebanon's reform moment will depend on the state matching sacrifice with sacrifice and enforcing laws equally, effectively restoring a key element of change: legitimacy.
The views and positions expressed in this article are those of the author(s) and do not necessarily reflect the views of DAWN.
