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Sat 16 Jan 2016 01:09 AM

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GCC gov'ts can raise GDP by 10% without need for taxes - research

Oxford Strategic Consulting reveals 18-point plan for revenue raising; says taxes will be 'hard pill to swallow'

GCC gov'ts can raise GDP by 10% without need for taxes - research

New research has suggested that GCC governments can raise extra revenues worth at least 10 percent of GDP without the need to introduce taxation in the region.

Research by Oxford Strategic Consulting for GCC governments found that it is possible to diversify government revenues without taxation even in the face of significant falls in domestic energy prices.

Given the volatility and unpredictability of oil prices, the primary economic strategy for all GCC countries is to diversify government income and reduce dependency on oil and gas revenues.

However, the Oxford Strategic Consulting said introducing taxation in the GCC region "may prove a hard pill to swallow for citizens" whose economic, political and social lives are based on a tax-free, subsided and levy-free way of life.

In an 18-point plan developed for one particular unnamed GCC government, Oxford said it has identified non-tax revenue sources with the potential to generate at least 10 percent of GDP.

These include maximising government revenues, such as state-owned enterprises (SOEs) and pension funds, that are currently untapped and could produce a huge rate of return.

Oxford also said the national workforce can be deployed in creative ways to not only generate government revenue but also to support other objectives such as increasing entrepreneurialism and private sector employment.

"This is feasible given that GCC governments are, on the whole, the favoured employer for nationals and often have an excess of human resources," said Oxford.

The research also urged governments to increase the willingness and ability of citizens to contribute to the national economy using 'nudge' motivational techniques as used by the UK government's Behavioural Insights Unit.

It added that new revenue generating ventures in areas where effective service impacts the well-being of the population or where it could compete effectively with the private sector can be created. "This is more desirable than selling overseas investments and privatising state assets, both of which provide only 'one-off' revenue whilst losing long-term income," it said.

Oxford said its research showed that there are "previously unconsidered solutions to help balance government revenues whilst also maintaining economic and social stability", adding that every GCC country needs to act now "before it is too late".

Oxford Strategic Consulting specialises in building human capital across the GCC and Europe with teams in the UK, Qatar, Saudi Arabia, Oman and the UAE.