Head of Parliament’s Financial and Economic Affairs Committee MP Faisal Al-Shaye declared that the committee will hold a joint meeting with the Budgets and Final Accounts Committee on Thursday in the presence of a delegation from International Monetary Fund (IMF) for discussing ways to increase taxes on the profits of commercial companies.
In a press statement, Al-Shaye indicated that the attendees will also discuss the need for some GCC countries to impose Value Added Tax (VAT) on commodities and products, affirming that the upcoming meeting is part of the efforts aimed for handling the imbalances in the state budget.
He explained that the budget deficit necessitates implementation of proper measures for dealing with the deteriorating situation of the budget, considering the absence of indications about any possible increase in the oil prices. The government has only two options — borrow money based on securities or withdraw from the reserves of the future generations.
The government will eventually choose the option that will have the least impact on the public funds. Al-Shaye indicated that many countries in the world prefer to borrow money, revealing that he prefers this option as well, reasoning that the deficit was expected and Kuwait had experienced it in 1999 when the oil price had dropped down to as low as $9 per barrel. At that time, the government had to cash some investments for meeting the budget deficit. Reiterating that the deficit in the budget is inevitable, he stressed that the oil prices must reach at least $70 per barrel in order to avoid such a deficit.
Al-Shaye insisted that the government has to identify the best way to tackle the budget deficit as well as study the impact if it decides to borrow money, through the committee which was formed for this purpose and is headed by Minister of Finance. In the same context, reliable sources revealed that IMF, based on a governmental demand, is studying the demands for reform of the tax system in Kuwait and determining the appropriate procedures to follow for improving the Kuwaiti economy.
They indicated that modifying the tax law on companies has become an inevitable need for varying the sources of nonoil revenues, adding that taxes will not be imposed on individuals in the current phase. Meanwhile, the State Properties Department is working on determining the rental values of all public real estates and properties based on the market value, reports Al-Nahar daily quoting governmental sources.
They affirmed that the pricing will be in line with the commercial prices in the market, which will change based on the demand, adding that the new pricing system will be launched in 2017. The sources said the application of this pricing system will result in increased state revenues, indicating that the expected increase in revenues following its application on all state properties and real-estates will be around KD 300 million to KD 400 million.
They explained that the department has prepared a reliable mechanism for reviewing the values of the contracts of many lands that were allotted for certain activities and collecting the state’s dues. The government recently increased the fees of service, commercial, industrial and other such plots for many sectors. Despite this expected increase, Kuwait will continue to have the lowest rents per meter for plots, compared to other GCC countries.
The sources indicated about improving the services in some industrial plots before auctioning or renting them out in order to increase their rental values with the aim of managing the financial deficit expected in the coming years.
By Raed Yousef, Ayed Al-Enezi and Nasser Qadeh Al-Seyassah Staff and Agencies