Soon after the GCC states announced they are going to levy VAT, utterly negative, malicious and provocative campaigns went viral on social media platforms, driven by the axis of evil represented by the Iranian-Qatari alliance.
The axis has taken advantage of the vast majority’s lack of knowledge on the importance of the VAT for their economic future. And despite the fact that the tax will not result in any great impact on the living standards of lower income families, thanks to the understanding shown by countries applying the tax.
Therefore, a series of measures have been taken to protect low-income families and fill the gap through which the Axis of Evil is trying to stroke the fire of incitement in some GCC countries. In the UAE and Bahrain for example, many controls have been put in place to monitor prices and prevent the use of VAT as a pretext to excessively raise prices, bearing in mind that the VAT is set not to include some basic materials, such as medicines.
In Saudi Arabia, a “Citizen’s Account (CA)” has been created, whereby citizens affected by the VAT and gradual increase of electricity and fuel prices will be compensated through transferring the subsidies to their accounts as most of them fall under the law-income umbrella. To extend the support to as many beneficiaries as possible, the government included Saudi citizens and women married to non-Saudis as well as their sons in the CA, which has more than 13.5 million people registered in registration so far.
Such an important step, which we called for in previous articles, will generate many positives. First, it will maintain the living standards of low-income families and at the same time will lead to the development of a viable tax system in these countries. It will also ease the burden on state budget through providing additional resources and rationalising subsidies whereby only the deserved can get them.
It will also block all incitement attempts and thwart the objectives of those who maliciously stand behind them.
Sustainable economies
Obviously, there is a clear understanding of the crucial financial reforms that some GCC countries are planning to conduct in preparation for the post-oil era and build sustainable economies through diversification and varying the sources of energy production.
For instance, the UAE is due to start producing electricity from nuclear reactors at the Barakah nuclear power plant and made giant strides in solar energy production. Saudi Arabia and Russia have also reached an understanding to build 16 nuclear power plants costing $80 billion (Dh294 billion) from now until 2032, where much of the country’s electricity needs will be covered.
The modernisation programmes in these countries are moving rapidly towards diversity and innovation, undeterred by the propaganda of the axis of evil, which is standing idly by after losing its brothers due to its hostile policies and actions. As is the case with Qatar, or have its people suffering from constant unemployment, bad living conditions and a collapsed national currency as is the case for Iran.
Only the future — and not the provocations — will reveal the importance of the financial and economic reforms. These will definitely be fruitful as evidenced by such experiments in highly developed countries.
It is true that it is not easy to build the future and prepare people to accept the changes that come with it because of the numerous enemies of success. However, having strong determination to follow the path of success despite incitements from failed parties remains the right path to development.
Thus, the awareness aspect is important to accommodate reforms, to positively cope with them, and temporarily shoulder some of the subsequent burdens for a more sustainable future.
Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.
