The strategy consultancy firm, Oliver Wyman, released the latest report “Taxation for the Future of the GCC,” which outlines how structural changes to fiscal policy could be an opportunity for governments to fuel future national transformation and drive economic stability through non-oil dependent taxation revenues.
Government debt is on the rise and budget deficits remain elevated – as much as $2 trillion may be required to balance the budgets of the six GCC countries by 2030. Historically the GCC states have relied on oil revenues to balance their budgets and while reserves are substantial, prices remain pressured by the global rise of alternative energy and electric vehicles.
Oliver Wyman’s report outlines the opportunity for potential non-oil revenues to be driven by taxation, one of a number of immediate reforms that could promote sustainable economic growth in line with and above global best practices.
“The GCC states are at an economic crossroads with significant efforts already in place to diversify revenue streams and maintain economic stability. There is huge potential for tax-related initiatives to provide a strong platform for supporting these initiatives and a once in a generation opportunity to transform public administration in the GCC,” said Ibrahim Ghoul, Partner at Oliver Wyman.
According to the report GCC governments could achieve 80 percent of targeted non-oil revenues with just four taxes. A range of new technologies also present a timely opportunity for governments to rejuvenate administration systems and leapfrog other worldwide legacy systems which are often a barrier to policy change.
Taking global best practices into account Oliver Wyman has compiled four core stakeholder recommendations within the report including:
• Taxpayers, a digitized experience: Using technology to drive closer involvement from the private sector and improve ease of doing business.
• Tax Agencies, data-driven administration: Build an organization for data-driven decision-making, analytics, and automation.
• Government Entities, creation of a seamless public service experience: Revolutionize public service delivery to create seamless citizen experience and a balanced economic effect.
• The Public, cultivating public accountability: Use public accountability and transparent reporting to build a voluntary compliance culture. — SG