Bahrain’s income tax, first in Gulf, sparks opposition
(DPA)
26 June 2007
MANAMA, Bahrain – Bahrain has become the first Gulf state to implement an annual income tax, and has done so over the objections of trade unions, religious figures and some political groups.
Some 100,000 workers, including more than 65,000 in the private sector and 35,000 in the public sector, had the 1 per cent tax deducted from their paychecks on Monday. Citizens and non-citizens alike must pay the tax to fund a new unemployment scheme.
The government, which already collects indirect taxes in the form of fees on imports and for services it provides, says the new scheme will put Bahrain on a par with more advanced countries in terms of social insurance for its citizens.
Bahrain’s income tax, first in Gulf, sparks opposition
(DPA)
26 June 2007
MANAMA, Bahrain – Bahrain has become the first Gulf state to implement an annual income tax, and has done so over the objections of trade unions, religious figures and some political groups.
Some 100,000 workers, including more than 65,000 in the private sector and 35,000 in the public sector, had the 1 per cent tax deducted from their paychecks on Monday. Citizens and non-citizens alike must pay the tax to fund a new unemployment scheme.
The government, which already collects indirect taxes in the form of fees on imports and for services it provides, says the new scheme will put Bahrain on a par with more advanced countries in terms of social insurance for its citizens.
Trade unions say the tax is unfair, pointing out it exempts military personnel and local and national elected officials. Key religious figures labelled the tax as un-Islamic because it deducts money from workers without their permission.
And the head of parliament’s opposition Islamic Shia Al Wefaq bloc, Shaikh Ali Salman, met with Prime Minister Shaikh Khalifa bin Salman Al Khalifa on Monday in an effort to stop its implementation.
Al Wefaq had originally supported the scheme, but withdrew its support under fire from its supporters and religious leadership. A source close to the group said the meeting failed to secure a stop to the tax, but agreement was reached to increase public sector salaries up to 15 per cent.
The six Gulf monarchies have refrained from implementing direct taxes on citizens, using surplus oil revenues particularly in the 1980s to employ nationals in the public sector and offer free or subsidized public services.
But Iraq’s 1990 invasion of Kuwait and the ensuing 1991 Gulf War strained regional economies at an estimated cost of 60 billion US dollars, prompting the monarchies to gradually reduce subsidies and privatize their public sectors.
Rising youth unemployment among Gulf youth in the 1990s, years of mismanagement and corruption and a sharp rise in the youth population compared to slow private sector growth have been contentious issues for governments of the region.
Gulf governments have been criticized by the US and West for years for their failure to introduce political reforms, expand public participation and address the issue of rising unemployment – issues blamed for helping to give rise to Islamic fundamentalist groups in the Gulf.
Assistant Undersecretary for Labour Affairs Jamil Humaidan says the tax income will help pay new job seekers with university degrees a monthly assistance ranging from 120 Bahraini Dinar (320 US dollars) to BD150 (400 dollars) a month.
Beneficiaries would be required to join training programmes under the government’s National Employment Project to help place them in private sector jobs. Bahrainis and some eligible expatriates who lose their job after paying contributions for at least 12 months could also claim 60 per cent of their salary, up to BD 500 (1,326 dollars).
The activist Committee for the Unemployed and Low-Wage (CULW), which has pushed the government for job-creating schemes and support for unemployed Bahrainis, criticized the new programme because of its six- month limit on benefits and its rigid requirement that after a candidate rejects a third job offer, he or she is cut off from benefits.
‘We do not want money to be deducted from salaries of people who are already struggling to make ends meet and keep up with rising inflation,’ said CULW board and founding member Hassan Abdulnabi.
The BD30-million (79-million-dollar) NEP project that seeks to find jobs for unemployed Bahrainis in the private sector – using joint agreements with companies and training – has come under fire for placing university graduates in mainly low-paid sales jobs.
On June 1, during a picket against increasing poverty in the Gulf island, the president of the Shia Islamic Action Society (IAS), Shaikh Muhammad Al Mahfud, criticized the government for failing to adopt sound economic policies over three decades. He charged the country had fallen behind on development compared to neighbouring countries.
Al Mahfud called on the government to raise the minium monthly wage to BD 500 (1,326 dollars) in face of rising inflation, at a time when many Bahrainis make less then BD 300 (812 dollars).
(DPA)
26 June 2007
MANAMA, Bahrain – Bahrain has become the first Gulf state to implement an annual income tax, and has done so over the objections of trade unions, religious figures and some political groups.
Some 100,000 workers, including more than 65,000 in the private sector and 35,000 in the public sector, had the 1 per cent tax deducted from their paychecks on Monday. Citizens and non-citizens alike must pay the tax to fund a new unemployment scheme.
The government, which already collects indirect taxes in the form of fees on imports and for services it provides, says the new scheme will put Bahrain on a par with more advanced countries in terms of social insurance for its citizens.
Trade unions say the tax is unfair, pointing out it exempts military personnel and local and national elected officials. Key religious figures labelled the tax as un-Islamic because it deducts money from workers without their permission.
And the head of parliament’s opposition Islamic Shia Al Wefaq bloc, Shaikh Ali Salman, met with Prime Minister Shaikh Khalifa bin Salman Al Khalifa on Monday in an effort to stop its implementation.
Al Wefaq had originally supported the scheme, but withdrew its support under fire from its supporters and religious leadership. A source close to the group said the meeting failed to secure a stop to the tax, but agreement was reached to increase public sector salaries up to 15 per cent.
The six Gulf monarchies have refrained from implementing direct taxes on citizens, using surplus oil revenues particularly in the 1980s to employ nationals in the public sector and offer free or subsidized public services.
But Iraq’s 1990 invasion of Kuwait and the ensuing 1991 Gulf War strained regional economies at an estimated cost of 60 billion US dollars, prompting the monarchies to gradually reduce subsidies and privatize their public sectors.
Rising youth unemployment among Gulf youth in the 1990s, years of mismanagement and corruption and a sharp rise in the youth population compared to slow private sector growth have been contentious issues for governments of the region.
Gulf governments have been criticized by the US and West for years for their failure to introduce political reforms, expand public participation and address the issue of rising unemployment – issues blamed for helping to give rise to Islamic fundamentalist groups in the Gulf.
Assistant Undersecretary for Labour Affairs Jamil Humaidan says the tax income will help pay new job seekers with university degrees a monthly assistance ranging from 120 Bahraini Dinar (320 US dollars) to BD150 (400 dollars) a month.
Beneficiaries would be required to join training programmes under the government’s National Employment Project to help place them in private sector jobs. Bahrainis and some eligible expatriates who lose their job after paying contributions for at least 12 months could also claim 60 per cent of their salary, up to BD 500 (1,326 dollars).
The activist Committee for the Unemployed and Low-Wage (CULW), which has pushed the government for job-creating schemes and support for unemployed Bahrainis, criticized the new programme because of its six- month limit on benefits and its rigid requirement that after a candidate rejects a third job offer, he or she is cut off from benefits.
‘We do not want money to be deducted from salaries of people who are already struggling to make ends meet and keep up with rising inflation,’ said CULW board and founding member Hassan Abdulnabi.
The BD30-million (79-million-dollar) NEP project that seeks to find jobs for unemployed Bahrainis in the private sector – using joint agreements with companies and training – has come under fire for placing university graduates in mainly low-paid sales jobs.
On June 1, during a picket against increasing poverty in the Gulf island, the president of the Shia Islamic Action Society (IAS), Shaikh Muhammad Al Mahfud, criticized the government for failing to adopt sound economic policies over three decades. He charged the country had fallen behind on development compared to neighbouring countries.
Al Mahfud called on the government to raise the minium monthly wage to BD 500 (1,326 dollars) in face of rising inflation, at a time when many Bahrainis make less then BD 300 (812 dollars).
