Assembly urged to okay finmin’s selective tax bill
Different from VAT
KUWAIT CITY, April 3: The government has asked the National Assembly to expedite approval of the Selective Tax Bill as per the recommendation of the Ministry of Finance, reports Al-Jaridah daily quoting sources.
Sources said the government has stressed the need to approve the bill quickly, pointing out this tax is different from value added tax (VAT) which affects all the needs of citizens; hence, it necessitates long period of discussion prior to approval.
Sources revealed the government has mandated the Ministry of Finance, upon the request of the ministry itself, to coordinate with the Office of the State Minister for National Assembly Affairs to take the relevant constitutional procedures concerning implementation of the GCC agreement on selective tax that was referred to the Assembly according to decree number 206/ 2017.
Sources added the Ministry of Finance stated that imposing selective tax should be a priority, indicating this tax is already enforced in a number of neighboring countries.
The ministry explained this is a special type of tax as it targets harmful and unhealthy products in a bid to at least lessen, if not stop, consumption of such products.
The ministry said selective tax will be imposed on different types of tobacco, energy and carbonated drinks; emphasizing such a move will not affect daily expenses or investment environment.
It cited a number of letters from its health counterpart, the last one of which was dated Feb 18, 2017, demanding for immediate enforcement of selective tax to protect public health in accordance with the recommendations of World Health Organization (WHO) and Public Authority for Food and Nutrition.
It also unveiled the plan of some GCC countries to include sweet drinks (juice with sugar) and luxury items to the list of products subject to selective tax.
It went on to point out that the enforcement of selective tax in neighboring countries led to rampant smuggling of cigarettes and price increase by manufacturers, while those countries are benefiting from the collected tax. However, the opposite happened in Kuwait as the manufacturers of cigarettes increased the prices and gained unjustified profits which prompted them to expand their investments in the same products.
It is easy to implement selective tax, taking into consideration the low cost and the possibility of having a new source of income rather than fully depending on oil revenues. The government could use revenues from selective tax in facing the consequences of people’s consumption of harmful products, the ministry concluded.