Saudi needs to impose taxes: ex-official

A former Saudi official has urged Riyadh to impose taxes, saying the Gulf kingdom is facing bleak economic prospects as oil is set to deplete.

Abdul Aziz Al Dakheel, former finance ministry undersecretary, also suggested slashing the number of government offices and sacking unnecessary employees.

In remarks published by the Saudi Arabic language daily 'Sabq', he said oil provides more than 90 per cent of Saudi Arabia’s income and hard currency, and funds almost all the Kingdom’s imports of goods and services.

“My question now is: Will oil last forever? The answer, of course, is no.

“The day will come when it will deplete, say within 30, 50 or 100 years.

“This is a fact which we should accept. At the same time, we are a society with very high population growth and this means demand for goods and services is steadily rising,” he said.

“Our country is mostly a desert without rivers, lakes or much rain. The water problem has started to deteriorate. These are only part of the problems with an economic nature that make me fear the future of this country.”

Dakheel, a prominent businessman and an economist, said Saudi Arabia, the world’s largest oil exporter, needs to introduce taxes as is the case in most other countries.

He said taxes must be imposed on individuals and companies operating in the Kingdom, adding that only the poor should be exempted.

“It is time to impose taxes, which are needed not only to fund the state budget, but taxes are an important tool in the economy whether in boom or stagnation periods.

“To ensure an effective tax system, all individuals and firms must pay tax.”

Dakheel said another measure which must be taken by the government to offset volatile oil revenues is to slash the number of departments and lay off a large number of civil servants.

He said ministries and other government departments in the largest Arab economy are suffering from “severe” redundancy.

“There are government offices which have 10 employees when only three are needed.

“The presence of that number of employees only prolongs procedures, obstructs work and reduce individual productivity.

“There is a need to restructure the state system by merging some of them, cancelling others and laying off the unnecessary employees, mainly old employees.

“These can be given a 10-year salary so they can retire or set their own business.”