The Saudi Minister of Finance announced that it was decided to stop the exchange of the high cost of living allowance and raise the value-added tax rate from 5% to 15% with the aim of saving 100 billion Saudi riyals.
Starting from next July, the date of the implementation of the decision, everyone in Saudi Arabia will feel a deterioration in their purchasing power and their need to deal with the third economic shock hitting the Kingdom due to the Corona pandemic and low oil prices.
In his narration of the economic situation in the Kingdom, the Saudi Minister of Finance stated that the Saudi economy has received three economic shocks due to the Corona pandemic, the first of which is the decrease in oil prices, the decline of domestic economic activities and the increase in financial support to the health sector, which led to a decrease in financial resources and put pressure on the Kingdom’s budget to reach levels that may damage the economy and finance at the medium and long levels.
It is important to note that the statement of the Saudi Finance Minister was free from any reading of the social implications of the decision to stop the payment of a high cost of living allowance, which may constitute a substantive reason for the departure of thousands of migrant workers who have been suffering the consequences of tax increases approved by the Kingdom in 2018.
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