As IMF urges Saudi VAT rate hike, economists weigh implications | ZAWYA MENA Edition:
Economists are divided in their opinion of International Monetary Fund’s (IMF) recommendation last month to Saudi Arabia’s authorities to consider raising the value-added-tax (VAT) rate from the current 5 percent.
While some economists argued that any hike would impede the drive to stimulate the private sector and risk higher unemployment, others believed the increase is sorely needed and any resultant cost would be short-lived, until the economy makes the required adjustments.
In addition, as oil prices show an upward potential, some analysts said that it would be possible for the government to meet fiscal balance targets without recourse to higher taxes. However, others noted that it is the right time to increase alternative sources of revenue to counter depleting financial reserves.
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