GCC can diversify revenues without raising taxes – study

Regional governments can generate at least 10 per cent of their gross domestic product through a number of non-tax revenue options, new research shows

Gulf Cooperation Council countries can generate revenues without raising taxes even in the face of plummeting crude prices, a new study showed.

According to a report by Oxford Strategic Consulting, GCC countries can generate at least 10 per cent of their gross domestic product through a number of non-tax revenue options.

The report pointed out that the governments could maximise their revenues by tapping into state-owned enterprises and pension funds, both of which could provide a high rate of return.

The study also suggested that more citizens must be encouraged to work in the private sector.

“Better utilising and deploying the national workforce in creative ways will not only generate government revenue but also support other objectives such as increasing entrepreneurialism and private sector employment,” the report said.

The Oxford study said that the GCC governments should also emulate a model that is used by the United Kingdom’s Behavioural Insights Unit, which uses a series of nudge motivational techniques to improve the willingness of the citizens to contribute to the national economic growth.

Another way of earning non-tax revenues is to create new ventures in areas where effective service impacts the well being of the population, the report added. These could be more effective than selling off overseas investments or privatising assets, which create just one-off investments, the study said.

The Gulf countries have historically relied on oil revenues to provide massive welfare programmes to their citizens. But with the oil prices plunging to a 12-year low this week, many governments have slashed fuel subsidies and raised taxes and other fees for government services.

Many governments have also revaluated a number of infrastructure projects, prioritising those that are immediately needed.