January 26, 2016


Gas price hike and subsidy cuts shake up Saudis (Ibrahim al-Hatlani, January 25, 2016, Al Monitor)

Saudi Arabia had never imposed any tax system in the past, except on foreign companies operating inside the kingdom, who are taxed 20% of their profits and 5% of annual transfers. However, the Saudi Department of Zakat and Income Tax does collect a 2% zakat (obligatory charitable payment) from Saudi and Gulf companies operating in Saudi Arabia. The total revenues of the department amounted to 30 billion riyals ($8 billion) in 2015.

Answering The Economist's question of whether he believes more taxes can be imposed in Saudi Arabia without increasing the people's representation in the Saudi monarchy, the prince said, "Again, one thing is not related to the other. This is not a decision from the government against the people." Rather, he said, the government represents the people and does not make decisions about reforms without conducting workshops that include a variety of citizens.

The prince's answer was vague. What did he mean by saying taxation and the people's representation in the Saudi monarchy are not related? Did he intend to say that the decision-makers in the ruling family -- the king and the crown princes -- will allow the people to take part in power apart from paying taxes or on the contrary?

However, the fact that the prince asserted to The Economist that he will rely on workshops to introduce new reforms to a major state such as the kingdom of Saudi Arabia -- while neglecting the role of elected municipal councils, the Shura Council and the need for an elected parliament -- does not bode well for the monarchy.

There are clear signs that the descendants of the founder, King Abdul-Aziz Al Saud, have the same logic as their parents in terms of making unilateral decisions. The Saudis did not know where their money went in the past and will not know where it is going now -- all they know is that they will pay a lot.

Posted by at January 26, 2016 4:13 PM