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Monday, January 21, 2019 ARCHIVES  |  SEARCH  |  POST ADS  |  ADVERTISE  |  SUBSCRIBE   |  LOGIN   |  CONTACT US

The beagle has landed

Winfred Peppinck

So VAT has finally arrived!

In truth it’s hardly the ferocious pit bull, more like a beagle.

Sure, there is a measure of criticism, but also letters of understanding, albeit begrudging acceptance.

People complain and bellyache.

For so long Bahrain’s tax-free lifestyles and largesse were propped up by a generous system of subsidies and material support. While the oil flowed, and the price was over $100 a barrel, that was extremely fortuitous assistance – allowing popular subsidies to continue.

That was then, but now economic factors have changed.

Welcome to a taxing world!

VAT hasn’t been thrust on the populous suddenly. 

There have been highly commendable prior discussions, meetings of many committees and lots of documentation, showing how many foodstuffs will be exempt and prices will remain the same.

Yet even today, with the facts laid out in great detail, there are still confused businessmen – especially small business owners. 

We also had parliamentarians who wanted the introduction of VAT to be delayed even further.

But it isn’t as though Bahrain is some kind of Robinson Crusoe island. 

It is a highly sophisticated, financially astute market economy.

Many countries have VAT, helping governments raise revenue so they can provide social security – including payments for health, education and, in Bahrain’s case, housing assistance.

Both Saudi Arabia and the UAE already had VAT.

There have been some excellent comments in the GDN, including those by columnist Hamed Fakhro and one highly sensible letter by Abu Mohammed, both looking at the economic consequences for Bahrain and its increasing debt. 

Both advocated that there should not be total fear and paranoia about the effect of the VAT, putting things in perspective.

Like many countries, Bahrain has extraordinary amounts of waste material, particularly wasted food from overabundant purchases that goes off.

There is no collection of over-ripe vegetables and food into special recycling bins, which can then be turned into compost and safely used at vegetable gardens as a natural fertiliser.

Perhaps VAT will make people more discerning about the products they purchase, assess whether they are necessary and increasingly consider whether they remain affordable. Things such as imported canned fruit and vegetables, when there are home-grown, VAT-free substitutes available. 

Perhaps we will see a change in consumer attitudes, with more looking for discounted prices at supermarkets and retail stores.

For those disgruntled individuals who bemoan that it will be hard to feed large families, remember that several basic food products are exempt from VAT. 

It’s a perfect opportunity to switch preference and also support local agriculture by purchasing fresh produce from excellent local markets.

Of course, many foreign-produced goods and services will have a VAT component, such as imported soft drinks and juices. 

Naturally, big-ticket items like new cars, televisions and other electrical goods will also be subject to VAT. 

Tourists and foreign visitors, including conference participants, will also have to pay VAT on their accommodation.

But the collection of that VAT will direct money back to the government and, ultimately, to the people of Bahrain - by funding important social services and the repayment of debt.

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