Saudi Arabia has started to apply he selective tax on goods and products harmful to human health and the environment such as tobacco, energy drinks (100 percent) and soft drinks (50 percent).
Economists see that the implementation of the selective tax in Saudi Arabia is a prime economic and health achievement and would motivate other Gulf countries to follow the example.
They also expect it to make a huge difference in treating budget deficits and reducing the impact of drop in oil prices on the Gulf level.
Dr. Salem Baajaja told Asharq Al-Awsat newspaper during a phone call that the tax is imposed on citizens and residents and is considered to have economic and health dimensions.
“There are several benefits that can be acquired from this selective tax. At the economic level – of Gulf countries generally and the kingdom specifically – there is a possibility of getting huge revenues that would fill a large share of the budget deficit of the Gulf countries, limiting impact of the oil prices drop”, he added.
Baajaja sees that imposing a 100 percent tax on tobacco products and energy drinks, and 50 percent on soft drinks would affect the consumer and not the merchant.
He pointed out that there are a couple of reasons that led to imposing this tax and directing people of lower income to consuming beneficial products.