Parliament backs bill to double VAT

A bill to increase the tax on goods and services cleared its biggest hurdle in a day of political drama yesterday, as 23 MPs voted in favour of doubling Value Added Tax (VAT) from five per cent to 10per cent.

Fifteen rejected the government-drafted bill to amend the 2018 VAT law, while one abstained and one MP was absent.

The debate and vote were held behind closed doors and continued after the normal closing time of 3pm with the session stretching for another hour.

Parliament Speaker Fouzia Zainal cleared the chamber of all journalists before the debate began in earnest. The live broadcast on YouTube and radio was also suspended following a request by the required 10 MPs to hold the sensitive debate in private.

This move was objected to by several legislators led by first vice-chairman Abdulnabi Salman who shouted that the public should be allowed to witness the proceedings.

Sources told the GDN that when MPs confronted Ms Zainal demanding to know the 10, she tore the paper and instead exercised her chairmanship right of holding a debate in the manner requested.

The bill had now been urgently referred to the Shura Council. If approved by the upper chamber and ratified it is likely to be introduced from January 1, 2022.

MPs also approved increasing social welfare and support allowances by 10pc. Twenty-six members approved the government-drafted amendments to the 2006 Social Welfare Law.

Out of 39 MPs, 11 voted against the bill and two abstained. The bill was a prerequisite from the National Assembly to consider the VAT bill.

Mr Salman questioned Ms Zainal on the manner of ‘rushing things’ when the government had not submitted the VAT increase plan to the house as a matter of urgency. She replied that it was based on her judgment and authority as the country’s highest legislator.

Meanwhile, Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa thanked MPs for their efforts in pushing ahead with the legislation in a record 48 hours.

“If it is about wishes then we would increase social welfare and support allowances by 1,000 per cent and why not 10,000pc and not the 50pc that some MPs requested during the session … but we cannot,” stated the Minister.

“Let us be clear. We are living at a time when there are limited resources and that’s the reality. But, the opportunities and ambitions in Bahrain are limitless.”

He said sensible decisions had to be made taking into account the country’s economic realities.

“We have to consider the purchasing power of the citizens and at the same time the kingdom’s financial stability,” said Shaikh Salman.

“There are 16,588 beneficiaries under the social welfare lists and 127,000 receiving support allowances and they will get 10pc increases. This is available from the funds we have.”

• Under the new social welfare system to be implemented from January 1, a low-income Bahraini would receive BD77 monthly, a couple would receive BD132 up from the current BD120, and each child BD25 (unchanged) but with the BD150 cap removed for the total given to a family.

• The anti-inflation monthly allowance will increase by 10pc from the current BD50, BD70 and BD100 depending on family income.

Furthermore, Labour and Social Development Minister Jameel Humaidan said Bahrain had not cut the BD450 million annual spending on social welfare, support allowances and subsidies despite difficult times caused by the global pandemic.

“All spending has had to be curtailed except for public welfare as we continue to provide a shield of protection for citizens.

“Things are subject to improvement and we are open to sitting with legislators on new criteria to support those with low-income.”

The 10pc increase is expected to cost the government BD2m more for social welfare and BD15m for allowances annually.

Source: https://www.gdnonline.com/Details/1016275/Parliament-backs-bill-to-double-VAT