“VAT has several advantages as a tax instrument: By using exemptions for basic commodities, it can be used progressively; it generates a stable revenue stream; it is relatively cheap to collect; and compared to other taxes, such as capital gains tax, it does not disincentivize investment.”
-Omar Al-Ubaydli, an economist who is Director of Research at the Bahrain Center for Strategic, International and Energy Studies, and affiliated with George Mason University, analyzes the history of value-added tax (VAT) and the thinking behind the Saudi government’s decision to increase VAT to 15%. [Al Arabiya]
