Saudi Arabia triples taxes

Saudi Arabia is tripling taxes on basic goods and cutting spending on major projects amid the coronavirus pandemic and low oil prices.

Saudi citizens will also lose a bonus cost-of-living allowance that had been in place since 2018, according to the country’s finance minister.

Despite efforts to diversify its economy, the kingdom continues to rely heavily on oil for revenue. Brent crude now hovers around 30 dollars a barrel, far below the range Saudi Arabia needs to balance its budget.

The kingdom has also lost revenue from the suspension of Muslim pilgrimages to the holy cities of Mecca and Medina, which were closed to visitors due to Covid-19.

The new measures are the most drastic yet by a major Gulf Arab oil producer since oil prices plunged by more than half in March, signalling that neighbouring countries may also seek to impose higher taxes on residents this year.

The International Monetary

Fund projects that all six energy producing Gulf Arab states will be in economic recession this year.

“We are facing a crisis the world has never seen the likes of in modern history,” Saudi finance minister and acting minister of economy and planning, Mohammed Al-jadaan, said. “These measures that have been undertaken today, as tough as they are, are necessary and beneficial to maintain comprehensive financial and economic stability.”

Despite far-reaching decisions by Saudi Arabia to contain the virus, such as shutting mosques and imposing curfews on major cities, the kingdom has struggled to curb its spread. Saudi Arabia has had some 39,000 confirmed cases of coronavirus, including 246 deaths.

The decision to cut about £21 billion in expenses includes cancelling, extending, or postponing some operational and capital expenditures for government agencies.