Ever since oil prices fell, the Gulf Cooperation Countries have been flip-flopping on the issue of remittance tax. Expatriates (read: migrant workers) living in the GCC annually send over US$ 100 Billion back to their home countries.
All was hunky-dory when the price of an oil barrel was over US$ 100. Today, the case needs to be revisited again in view of the low oil prices, looming deficits and the prospect that the black tar is not quite the gold it used to be.
Additionally, the world is moving towards alternative energy. Renewables is the new oil. Look at Tesla, Solar City, Tesla PowerWall, etc. The race is on. Solar has never been so cheap. So oil is undoubtedly has had its run. Like a bungling singer, refusing to bow out, oil producing countries are now contemplating on how to cut expenses and generate more revenue. The proposed remittance tax has been debated in the corridors of power in all of GCC.
- Remittances from GCC to Fall…Soon!
- What is the future of workers remittance from the Middle East to countries like Philippines, India, Vietnam, Pakistan, Bangladesh, etc.?
Earning US$3 to US$6 Billion per annum is a welcome relief to GCC – in form of remittance tax and spending that money on the local economy instead of exiting their country. But it raises serious questions about the repercussions such an action would have.
The Saudis have already implemented belt-tightening on their expenditure, how successful it will be – only time will tell. Will the additional Billion or three help? Certainly. I have no doubt that this time, GCC will take the necessary steps to introduction taxation on expatriate/migrant workers pay. The only element in question is when and how much.
Levy could also help to close a current account gap created by low oil prices.