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Bahrain contemplating the T word 6, November 2009

Posted by thegulfblog.com in Bahrain.
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Despite being an economic inevitability the fact that Bahrain’s Minister of Finance has publicly said that the Manama government will have to consider imposing taxes in the near future is still somehow surprising.

“Here in Bahrain, the government cannot afford to continue to pay for everything and subsidise everything so at some point taxation is inevitable.

Is there a rational argument against imposing taxes? Or indeed any argument that doesn’t essentially boil down to the stamping of the foot and bleating ‘I just don’t wanna!’…I can’t think of one.

Two quick thoughts: First, it seems to me that by putting the topic of taxes off as the Gulf rentier states clearly are, they are simply passing the problems onto their children. By ‘their’ children I am referring the future Crown Princes who, given that lineage guarantees power in the Gulf, will be in  power and will have to deal with the problems that current rulers do not want to deal with. Second, at the moment, most of the Gulf States (not Bahrain, though) are, I’d suggest, roughly at the apex of their earning a capacity. Of course, for decades to come, they will continue to earn huge amounts of foreign rent for oil and gas, but with this enormous fiscal largess stretching in front of them, is not now the best time to introduce taxes: i.e. when everybody is rich? It will surely be harder to do this when gas and oil is dwindling and the public purse is no longer as bulging.

Hat tip: Suq al Mal