Did anyone read the full IMF report on Bahrain? The GDN’s potted version was full of pleasing comments, happy with the progress, Bahrain reining in its fiscal debt, praising the country on adoption of VAT (although I read today, less than 50 per cent of small businesses, registered with authorities, as required by law).
Many glowing accounts, cutting back on the civil service, helped by the numbers taking “package deals” following early retirement, redressing, costs of a large civil service.
Good job creation, spending on education, hospitals, medical welfare, infrastructure spending, providing employment opportunities and future development in a number of sectors.
Addressing gender imbalance in the workforce.
Significant promises of foreign investment, genuine effort to lessening reliance on the oil and gas sector (noting lower global oil and gas prices), healthy focus on tourism and medical sectors.
All good, a happy disposition, with GDP growth of 2.1pc, albeit down slightly from the previous financial year, still in “positive territory.”
No I’m referring to a little note, in column five! (I hesitated to call it a Fifth Column, given the connotations that carries!)
There it was, the IMF, in a “wash your mouth out,” moment.
Suggesting that Bahrain could improve its fiscal position and debt situation by instigating an income tax provision on salaries and wages.
Well parliamentarians would rid you of expats, quick smart!
Bahrain’s largely tax free environment is a sure winner and keeping them in Bahrain, often as long as possible, or when reaching the age (60) limitation.
Well paid recruitment, a lure for good, highly paid jobs, even though they are taxed at home on foreign earnings.
Most useful too, for travel overseas on holidays when those wages are taken overseas!
Especially when, on certain particular products, like crystal glasses etc, allow exemptions, so a VAT refund at borders!
VAT is regarded as a, “necessary part of living” in most of the Western world.
Keeps people in villas leased from Bahraini landlords!
No doubt landlords build VAT into increased rental costs, so foreigners are also paying landlords’ contributions.
As they do in the supermarkets for imported food, electronic goods, mobile phones, and all the things Bahrainis paid for as well.
There will be fierce reaction to any implication of taxing income, particularly given the difficulty some Bahrainis already have in adjusting to the VAT.
And if that happens, who knows what else can be taxed, like land tax, property tax, more sizeable transport tax, increases in electricity and water tax, which most people regard as high enough already, despite the advantage of having housing assistance, if people wait long enough for their allocation.
The other thing that people must consider is the state of the global economy.
Economists generally agree, issues like the US-China trade war, increasing global concerns about security in the Middle East, political situations in Venezuela, France, Libya, Yemen and parts of Europe and growing global refugee problems.
The world is a less sure place, with leaders who rule with tweets with eyes to elections.
With global economic concerns, surely economic prudence is needed.