Why we'll never forget July 1

When you woke up this morning, got dressed for work and then had your bowl of fruit and fibre followed by a healthy smoothie, I'm guessing you didn't think to yourself that today is one of the most significant moments in the 26-year history of the Gulf Co-operation Council. I don't blame you really - it's Sunday, after all. But take a step back for a minute and think hard as to why today will change the landscape of the UAE and the GCC forever. Think about how today will affect the decisions of millions of residents and an even greater number of non-residential business people right now and for years to come. And think about how future employers and employees will have to change the way they themselves think about relocating their careers, their families and their businesses.

I'll give you a clue, it's not because today sees the release of the Merrill Lynch World Wealth Report highlighting how many more millionaires there are in the Middle East compared to last year. The real reason is much more important.

Curious now? Well you should be because at midnight last night the UAE embraced visible taxation and now there's no going back. It may just be an AED4 (US$1) road toll charge each time your Nissan Prado bleeps through a paygate - and we all have our views on whether it is the right or wrong strategy to take when no viable alternatives exist on the roads - but in reality it is a population and tourist-wide tax. Not only that, it is a clear sign for the rest of the world to see that Dubai, and the rest of the Gulf, if it follows suit, is now unafraid to lay down a clear form of everyday taxation to its seven million annual business and leisure visitors, as well as the UAE's four and a half million residents. July 1 marks a significant shift and the dawn of a new Dubai.

Naturally the authorities have introduced a toll with the main aim of decongesting the roads, but equally to raise revenue to help fund future infrastructure projects or even greener causes such as solar power. The most intelligent reason for the toll, however, is to introduce a discernible tax in the softest form possible. Value Added Taxation (VAT) will then be next to arrive either at the end of this year or potentially at the beginning of 2008 and will replace the outgoing customs duty. Then, well, who knows? All we do know is that to become a modern city and country, and to match such high and fast-growing expectations and ambitious targets with reality, a modern nation has to, at some stage, introduce taxation. However rich you are as a country you can't pay for everything forever, there must come a time when you ask those you have helped to pay you back, and people will.

July 1 will forever be remembered as the day when tax came to town, but much more importantly, when the new Dubai was born. Let's embrace this move, but equally hope that salaries rise in tandem and that we don't all have to become millionaires to cope with the pace of change.

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