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Saudi Arabia Introduces VAT as Oil Revenues Slump

Graham Watson

3rd February 2017

Very interesting news emanating from Saudi Arabia; the /cabinet have backed the imposition of value-added tax at an initial rate of 5% from 2018 to tackle the ongoing budget deficit. This has been forced because of the slump in oil revenues and poses some interesting questions for potential growth.

To what extent have the Saudis squandered oil revenues and have they diversified their economy enough to withstand this? I suspect that there isn't an awful lot of diversification - however, those responsible for myopic policymaking have probably left the scene a while ago.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to Tutor2U, reads voraciously and is interested in all aspects of Teaching and Learning.

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