Fiscal Reforms in the Middle East: VAT in the Gulf Cooperation Council

This insightful book focuses on the role of fiscal policy in common markets, especially in the context of the supranational constructs in the Gulf Cooperation Council, comprising Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman. It draws on the experience of the EU and the importance of VAT, and reflects on the other main common market in Central America. Although oil windfalls have opened a window of opportunity for the Gulf States, at the same time they have created numerous problems. In particular, the uncertainty associated with periods of boom and bust in the oil market has made the formulation and implementation of sound fiscal policies a formidable task. In this study, the distinguished authors present the background to current fiscal reforms and address the critical challenges facing the Gulf States including the choice between consumption and saving (or current needs and future requirements); intra-generational equity issues; the pro-cyclicality of fiscal policy; fiscal sustainability and the prudent management of revenues from finite oil reserves. They examine the case for VAT to substantially replace customs duties, a significant source of non-oil revenue which would be lost as a result of free trade agreements between the GCC and key trading partners. They also demonstrate how an agreed design for VAT would assist in furthering economic integration, and enhance trade and exports. If properly sequenced, VAT would have a negligible impact on both inflation and the poor, and would be progressive in relation to the customs duties replaced.This highly topical book will be of great interest to academics specializing in public sector economics and public finance, and to national and international policymakers involved in fiscal reform.

Table of Contents:
Contents: Introduction 1. Design of a VAT for the GCC Common Market Ehtisham Ahmad PART I: WHAT DOES INTERNATIONAL EXPERIENCE HAVE TO OFFER? 2. The Value Added Tax in the Context of the Proposed GCC Common Market Vito Tanzi 3. Central and Subnational VATs in Federal Countries Richard M. Bird 4. The Design of a VAT for Multi-Government Jurisdictions: Lessons from Canada Robin Boadway 5. The European VAT and the Common Market Framework: Lessons for the GCC Christophe Waerzeggers 6. The VAT in Common Markets: Lessons from Central America Carlos Silvani 7. VAT, Revenue Sharing, and Intergovernmental Transfer Design: The Australian Experience Bob Searle PART II: INTRODUCING THE VAT IN THE GCC AND UAE 8. Setting a VAT Registration Threshold: GCC Considerations and Evidence from Dubai Ehtisham Ahmad and Giorgio Brosio 9. A VAT in the UAE: Distributional Consequences and Social Sectors Ehtisham Ahmad and Giorgio Brosio 10. Treatment of Financial Services under a UAE VAT Satya Poddar and Jayanta Kalita 11. Institutions, Political Economy, and Timing of a VAT: Options for Dubai and the UAE Ehtisham Ahmad Index

About the Author :
Edited by Ehtisham Ahmad, London School of Economics, UK, Chinese Academy of Fiscal Science and Zhejiang University, China and Abdulrazak Al Faris, Chief Economic Advisor, Dubai Department of Economic Development (Dubai Economy), United Arab Emirates