Families to change their spending habits

Though it stands at five per cent, Value Added Tax (VAT) is expected to change spending habits among families. Given that starting from January 2018, electricity, water and higher education will be taxed among other aspects, expat families across the UAE are already setting their new budget plan. Egyptian national Sherif Maher, father of three, said the key will be getting rid of unessential items to dedicate more of the income on the essentials.

“We will mostly work on reducing out spending and cutting down on consumption,” said Maher. He said using electricity more efficiently to save power and shopping for groceries wisely are some of the decisions the family is planning to make. “Instead of shopping from the high-end supermarkets, we will start getting groceries from the average stores. The luxurious or supplementary items like sweets or soft drinks will be scratched off our list,” he said.

For homemaker Abeer Ismail, she will shop more on discounts while being mindful of her choices. “We won’t go for organic or gluten-free items if their prices magnificently increase. To adjust, we will have to shop less and during sales more often, especially when it comes to clothes shopping,” said Ismail. She added: “After VAT, we will dine out less often than we normally do to use the money saved on the more essential services.”

With only one child still at school, they said being more financially cautious might help in covering education expenses to avoid financial difficulties. “Although the tax is small, it will make an impact on the long run. The little extra expenses add up and will, therefore, lead people to change their purchase power to live efficiently and minimize loses,” said Ismail.

sherouk@khaleejtimes.com