Saudi Arabia’s government adds 5% tax on some goods

2017年8月1日

Expert

Vocabulary:

  1. incur – to lose money, owe money, or have to pay money as a result of doing something
    The company incurred huge losses over the past six years.
  2. defer – to delay something until a later time
    The board deferred its decision to sell the company until later this year.
  3. expatriate – someone who lives in a country that is not his/her own country
    The convicted murderer is an expatriate worker from Spain.
  4. reintroduction – the act of bringing something into use or existence again
    They were protesting against the reintroduction of the consumption tax.

Saudi Arabia is one of the top oil exporters in the world. However, the country incurred a $97bn deficit on its revenue because of the steady oil price slump last year. As a result, the government’s budget has been slashed and some major investments were deferred. In compliance with the International Monetary Fund’s (IMF) recommendation, the Saudi Arabian government and the GCC agreed to introduce VAT on some commodities.

VAT was not only introduced in Saudi Arabia, but also to other member countries of the GCC. These countries agreed to introduce VAT on tobacco and soft and energy drinks. According to the IMF, the Saudis used to pay different taxes in the 1950s but these taxes were reformed to exempt the nationals. The foreigners were also exempted from income taxes in 1975 because the Saudi Arabian government needed to recruit expatriates to further boost its big oil industry and build infrastructure. However, the reintroduction of tax this year will end the Saudis’  67 years of tax-free living.

True or False:

  1. The recent steady oil price slump encouraged more expatriates to work in Saudi Arabia.
  2. There were already different forms of taxes in Saudi Arabia in the 1950s.
  3. Foreigners will still be exempted from paying their taxes.
  4. Saudis haven’t paid consumer tax for years.
  5. The Saudi Arabian government and the GCC will introduce VAT regardless of what the IMF says.

Express your opinion:

  1. Do you agree that paying consumption tax can alleviate a country’s economic problem? Please explain your answer.
  2. What do you think should Saudi Arabia do to recover from its economic slump?
  3. What do you think are the reasons why governments introduce tax reforms?
  4. In this day and age, do you think it is possible for a country to survive without having its citizens pay taxes?
  5. Do you think tax-free living is possible in Japan? Please explain your answer.

Defend your argument:

  1. Tax implementation can incite people to do illegal activities.
  2. Tax implementation can discourage people from working well and hard.
  3. “The problem is not that the people are taxed too little. The problem is that government spends too much.” — Ronald Reagan