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GDN Reader's View: Is VAT scary?


With the Gulf nations introducing Value Added Tax (VAT), questions that demand answers are rising. For instance, how will consumers be affected by the price rise of most products and services? Economists have been giving us their interpretations and all implications are that we will somehow be affected by the price rise.

However, let’s see the other side of the coin. The introduction of VAT will enable us to revise our expenditure styles, which, for years have been extravagant. The ‘sin tax’ introduced by the government last week must have affected consumers of those items and some smokers I talked to have decided to reduce the number of cigarettes they consume daily. It will help them save money and maintain a healthy lifestyle.

The implementation of VAT is a two-way street, say economists. At individual level, it helps to cut unnecessary spending and at government level, it generates revenue to help it invest in infrastructure and other projects that we desperately need.

Reports indicate that food waste in Bahrain runs to tonnes of edible items thrown into the garbage. This is because people buy food items free from VAT beyond their consumption levels. After VAT, however, every piece of bread, fruit and consumable items will be carefully selected, bought and consumed. And with little or no wastage, we are becoming environment-friendly people.

So the introduction of VAT and its implementation should be viewed as a glass half full rather than a glass half empty. VAT helps us save money and generate revenue for the government.

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