New Saudi taxes on tobacco and soft drinks spark anger

#Economy

Taxes on tobacco, sodas and other commodities take effect on 10 June

Saudi taxes on commodities could reach as high as 100 percent of the value of the item, according to local reports (AFP)
Mohammad Ayesh's picture
Last update: 
Tuesday 6 June 2017 7:36 UTC
Topics: 

Saudi Arabia will start imposing new taxes on tobacco, sodas and other commodities at a rate that could reach as high as 100 percent, starting from 10 June, according to local media reports.

The kingdom's official newspaper published the regulations of these taxes that will come into effect in a few days, including a 50 percent charge on soft drinks and 100 percent on tobacco and its derivatives, as well as energy drinks.

Officials said that they expect to collect $2.1 bn to $2.7 bn annually from the new tax, according to a report by the Saudi channel Al Arabiya. Saudi Arabia also plans to impose a five percent value added tax (VAT), starting next January.

The new tax comes weeks after US President Donald Trump’s visit to Saudi Arabia, which included the signing of a series of bilateral deals worth tens of billions of dollars, at a time when the kingdom is taking measures to reduce its budget deficit.

Many citizens in Saudi Arabia have criticised the new measures, linking some of them to the huge amounts of money Trump received from Saudi Arabia, or the billions in deals concluded with the United States. In the same context, a Saudi citizen tweeted: "Trillions for Trump, and taxes for citizens.”

Saudi activist Essam al-Zamel, who is followed by about one million people on Twitter, wrote: “After the selective tax, which will come into effect in a few days, whoever smokes two packs (of cigarettes) a day will pay around 1500 Riyals a month, the equivalent of a car payment.”

Another activist, called Turki al-Shahloub, commented on the new tax by comparing Saudi Arabia to other Gulf countries. “Qatar started increasing staff allowances, and UAE is cutting fuel prices next month, while Saudi Arabia applies a selective tax and raises fuel prices,” he tweeted.

Many Saudis shared on social media the lists of the new prices of many commodities, especially cigarettes, soft drinks and other affected items.

Local media reported an increase in demand for these goods, as Saudis started stocking up in anticipation of the price hike.