DOHA: The investments in infrastructure and property market in the resource-rich GCC are really huge. Oil wealth has been heavily invested in residential and commercial property in the GCC. It is efficient to tax real property, not only because it is immobile, but also to finance the cost of public infrastructure and other services necessary to preserve the value
of real property, Mario Mansour (pictured) of International Monetary Fund (IMF) said.Going forward, the non oil economies will find it extremely difficult to maintain these properties and huge infrastructures. Those who are utilising these facilities need to pay back to maintain it, he said.
Giving an overview of revenue and tax policy developments in the region at a conference in Qatar University recently, Mario said oil is not going to say here for long. For instance, the oil reserves in some countries in the region are going to be exhausted in another 100 years. Hundred years is not such a long period in the history of a nation.
Mario noted the proposed 5 percent value added tax (VAT) in the region is too low and it can go up going forward. The 5 percent VAT rates tend to be low relative to regional and international standards, he said. Experience of tax policy reform in Mena over the past two decades suggests that changes to tax systems have been marginal in most countries, particularly as they relate to tax bases. More fundamental reforms should be considered, that re evaluate long standing practices in tax policy, particularly in the area of VAT and excises, personal income taxation, and investment tax incentives. This demands stronger political commitment, transparency in the conduct of tax policy, and a longer perspective. He said tax policy options must be grounded in detailed country-specific analyses. At this detailed level, policy options are likely to differ significantly across countries, including in the weights governments may attach to revenue mobilization, versus equity and efficiency issues.