Eleven Salman issued a decree that sets the payment

Topic: EconomicsConsumer Science
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Last updated: June 24, 2019

Eleven Saudi princes were arrested after a sit-in in front of the royal palace of Riyadh against the austerity measures decided by the heir to the throne Mohammed bin Salman. The princes protested against the government’s decision to stop paying electricity and water bills, a decision that also affects ordinary citizens.

The principles were arrested “for disturbing public order”. The “maneuver” decided by Bin Salman also provides for cuts to subsidies that keep the price of petrol and foodstuffs very low and the introduction of VAT to 5 percent, and has caused sporadic protests, especially in the East of the country. According to the Al-Sadq information website, however, the princes also protested by the hanging of their cousin, after the “anti-corruption” crackdown at the beginning of last December, when between 400 and 700 members of the royal family 4 thousand male descendants were arrested. The countermove of the KingIn an apparent defeat of austerity decided by his son Mohammed, yesterday King Salman issued a decree that sets the payment of 1000 riyals more per month, about 270 dollars, to state employees, after the protests for the introduction of VAT that he increased petrol and other basic necessities. There were riots, with some distributors burned in the East of the country, where the Shiite minority lives. King Salman also decided a compensation of 5,000 riyals for the soldiers involved in the war in Yemen and aid to pensioners. The correction of the route comes from the fear that the economic reforms introduced to reduce the budget deficit, which exceeded 15 per cent of GDP in the last two years, make the anger of a population accustomed for decades to have almost everything free.

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This year the United Arab Emirates and Saudi Arabia were the first two Gulf countries to impose a tax on consumer goods. Until a few years ago taxes did not exist in oil monarchies and citizens had homes, water, electricity, gasoline for free or at very low prices thanks to state subsidies. Taxes and deficits after the collapse of crude oilAfter the collapse of the crude oil prices in 2014, a series of maneuvers eliminated part of the subsidies and the calmed prices. The “correction” of King Salman will have a cost to the state coffers of 23 billion riyals, just over six billion dollars, compared to a deficit of 195 billion riyals, however almost halved compared to 2015, when it touched the 367 billion riyals, equal to 97 billion dollars, compared to a GDP of 610 billion dollars.

However, the Saudi and Emirate governments now exclude income taxes, which have always been zero. Kuwait, Bahrain, Qatar and Oman are planning to introduce VAT, starting in 2019 or 2020.

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