Al-Madinah

When the Ministry of Finance announced that it will introduce a 5 percent VAT in 2018, some columnists supported the decision while others opposed it and even criticized it despite VAT having nothing to do with an individual’s income. Moreover, 5 percent is a minimal figure when compared with the VAT rate in other countries.

There is one thing that is for sure: VAT will be deducted from a person’s income indirectly. How will this be done? The tax will be imposed on the import of goods bought overseas and sold in local markets; companies will not be affected and it will be citizens who will bear the cost.

Those who support the tax and those who oppose it agree on one thing and that is that the VAT will be paid in exchange for the public services that the government provides to people, such as hospitals, roads, government schools, parks, etc. VAT helps the government provide public services and reduces the dependency on oil as the sole source of revenue. There is no doubt that living expenses will increase in a way that is commensurate with people’s lifestyles. Families should focus on buying goods and products that are exempt from VAT. Furthermore, VAT helps the government enhance the economy’s performance and diversify resources.

Those who are against VAT should realize that it is not very high in the Kingdom. Many countries impose high taxes on the income of individuals, in addition to taxes on salaries, property, sales and even gifts.