Cash-strapped Oman plans to take a step unheard of in the Persian Gulf region: It’s going to start taxing the income of wealthy individuals beginning in 2022, as part of a broader program to tackle a budget deficit that’s ballooned due to low oil prices and the coronavirus pandemic.
By reducing government spending while spurring investments, the plan is projected to bring the budget deficit -- estimated to reach nearly 19% of gross domestic product in 2020 by the International Monetary Fund -- to 1.7% by 2024, the Ministry of Finance said in an emailed statement on Sunday. Revenue from the income tax will be used to fund social programs, it said.
| WHAT BLOOMBERG ECONOMICS SAYS... |
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“Oman needed urgent action and the plan is a start. Some of the goals are ambitious to the point of unrealism such as the narrowing of the budget deficit to 1.7% of GDP in 2024 from 15.8% this year. Others could disrupt the political economy of rentierism such as the possible introduction of income taxes, although it’s not clear if this will apply only to expatriates or to citizens as well.” -- Ziad Daoud, chief emerging markets economist |
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