Bahrain Mirror (Exclusive): Bahrainis see how the ruling government has resorted to their pockets in order to pay for the country's debts and compensate for budget deficits that have resulted from the lean years, although they have not gained anything from the prosperous years. Their condition reflects the opposite of the local proverb, as they are  "getting into a loss and out of profit".

The situation in Bahrain went beyond the lifting of subsidies on fuels, energy and commodities to imposing more taxes. This is not the end of such decisions, as Bahrainis await harsh economic decisions that the authorities are getting ready to approve and implement, mainly the value added tax (VAT), which is estimated at a 5% imposed on all goods except those exempted by an order.

Finance Ministry acting Under-secretary Yusuf Abdulla Hamoud stressed on (August 30, 2018) Bahrain's full commitment to applying the value-added tax in compliance with the unified agreement which was signed by the GCC member states, on the implementation of VAT levies.

A timetable for the implementation of the tax would be announced, along with all technical and procedural details, he added.

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— Ministry of Finance (@BahrainMOF) August 30, 2018

The Bahraini Minister of Finance Ahmed bin Mohammed Al Khalifa announced that the government will work with the "Parliament on the VAT and aim at having everything set up by the end of 2018," adding that "it's vital for Bahrain to go through that process as we diversify."

Restructuring Monetary Support

In addition to applying VAT, Gulf countries offering support to Bahrain are waiting for the island kingdom to reduce its spending, as the government is seeking to agree with the Parliament on a new plan to redirect monetary support and reduce its allocation.

The Government proposed to divide the support into three categories, the first one, including those with a salary of less than 300 dinars, as they will receive monthly support of 150 BD.  The second category includes those with salaries ranging from 301 to 700 dinars, and they will receive monthly support of 100 BD, while the third one comprises those whose salaries range from 701 to 1000 dinars, and they will receive financial support of 70 BD.

As for the housing allowance, the government's vision requires dividing them into two categories, the first includes those living in rented houses. Those will receive support of 100 dinars. However, the second group comprises those living in their parent's house and will receive monthly support of only 50 dinars.

Among the government's proposals is to stop granting subsidies to those with minor disabilities, whose salaries exceed 500 dinars, and to keep the average disability allowance at 100 dinars, while support in the severe disability allowance is increased to 200 dinars.

New Retirement Laws

The government wants to approve new retirement regulations to face risks of actuarial deficit witnessed by the Fund. What the Social insurance Authority also deemed necessary to be implemented is to increase the percentage of contributions to the insured to 27% (they are currently 18% for the private sector and 24% for the public sector).

It also suggested that the annual increment for retirees should be disbursed for a period of 7 years only, on the basis that the pension should not exceed the salary on which the pension was based, and that the annual 3% increment added to the pension should not exceed 50 dinars per year. It also suggested not to add the annual increment to the salary until the citizen reaches 55 years old.

The government wants the mandatory retirement age for men and women to be 60 years in all pension funds with the possibility of a voluntary extension to the age of 65, along with other regulations that detract from the earnings of retirees.

After the authorities failed to reach a diversification of sources of income by investing in tourism or industry, or even imposing taxes on capital owners, it only found that it should take from the pockets of poor citizens to diversify its income. Bahrainis expressed, through social media outlets, their outrage at the expected decisions and for being made responsible for the failure of the governing authorities policies over the past decades. However, the government only responded by saying that the social media accounts of citizens expressing their frustration are Qatari accounts that aim at influencing the elections and targeting the social fabric!

Tags: Pension Law, Public Debt

Arabic Version