The first real challenge to the Gulf states’ plans for value added tax (VAT) has come from Kuwait, where several members of parliament (MPs) have said that they will not be voting for the measure.
Voicing concerns that imposing the VAT will increase prices for both citizens and expat workers in the Gulf state, the MPs said that they would not back the proposal when it comes to the National Assembly.
Unlike other Gulf states, Kuwait is closest to the ideal of a functioning democracy in the region and its National Assembly of 50 members is the country’s legislative power.
According to a report in Kuwait Times, MP Riyadh Al-Adasani had declared that said he is against the VAT. Another MP, Jamaan Al-Harbash said that it was not possible to accept VAT due to inflation and the government’s inability to control prices.
Also joining the two was Abdelkareem Al-Kandari, who also demanded significant improvements to government services before the introduction of VAT.
Al-Harbash also pointed out that the Cabinet’s approval of the GCC VAT treaty does not mean it will be effective without Parliament ratification.
Earlier this week, the Kuwaiti cabinet had given a nod to the VAT along with a host of other regulations and proposals.
It is prudent to note that in Kuwait, the National Assembly is the main legislative power and its ratification is needed for bills to be made into laws.
The Emir can veto the assembly’s laws and decisions but the National Assembly can override his veto by a two-third vote.
The government, perhaps anticipating opposition in the National Assembly, has said in the recent past that it was studying methods to reduce the negative impacts of economic reforms such as the VAT on lower-income households.
It is also important to note that this is not the first time that Kuwaiti MPs have opposed measures that impacted incomes and services in the country.
Last October, the parliament had to be dissolved due to the assembly’s stiff opposition to the government over the introduction of higher fuel prices.
For now, several reports have said that Kuwait might not keep to the January 1 deadline for introduction of a 5% VAT along with other Gulf Cooperation Council countries to boost their coffers in times of lower fuel prices.
Recently, ratings agency S&P predicted that Kuwait could take until 2019 to implement VAT in its entirety.