COVID-19: Saudi increases VAT, suspends monthly payment to citizens
The kingdom has announced plans to triple its Value Added Tax and halt monthly handout payments to citizens in new austerity measures amid record low oil prices and a coronavirus- led economic slump.
The measures, which could stir public resentment with the cost of living rising, come as the petro- state steps up emergency plans to slash government spending to deal with the twin economic blow.
“It has been decided the cost of living allowance will be halted from June 2020 and VAT will be raised from 5 percent to 15 percent from July 1,” Saudi Finance Minister, Mohammed al-Jadaan said in a statement released by the official Saudi Press Agency.
Jadaan insisted the measures were necessary to shore up state finances amid a “sharp decline” in oil revenue as the coronavirus pandemic saps global demand for crude.
The government was also “cancelling, extending or postponing ”expenditures for some government agencies and cutting spending on major state projects introduced as part of an ambitious reform programme to diversify the oil-reliant economy, the minister added.
Jadaan last week warned of “painful” and “drastic” steps to deal with the double shock of the novel coronavirus and record low oil prices.
