KUWAIT CITY (AP) - Kuwait's government has proposed a 10 percent corporate tax on profits and the privatization of some publicly-run services and facilities to close a widening budget deficit brought on by a plunge in global oil prices.
KUWAIT CITY (AP) — Kuwait's government has proposed a 10 percent corporate tax on profits and the privatization of some publicly-run services and facilities to close a widening budget deficit brought on by a plunge in global oil prices.
The Cabinet suggests privatizing services at Kuwait's airport, ports, as well as the management of schools, hospitals and some facilities owned by Kuwait Petroleum Company.
The proposals are part of a nearly 60-page document outlining broad economic reforms the Cabinet says are needed to boost non-oil revenue, decrease public spending and widen private sector growth.
Without offering too many specifics, the document suggested other reforms such as merging government agencies and ministries and re-pricing public goods and services, which suggests a partial lifting of subsidies on electricity, water or gasoline could also come into effect.
It is first time since oil prices began sliding in mid-2014 from $115 a barrel to below $40 that Kuwait has proposed an overhaul of its spending. Government revenue fell by 60 percent last year due to lower oil prices. Kuwait projects a $40 billion budget deficit for the coming fiscal year.
The reining in of generous benefits is sensitive in the Gulf, where citizens are accustomed to free healthcare, tax-free incomes and government subsidies that keep prices low.
Neighboring oil-exporting countries, like Saudi Arabia, Bahrain and the United Arab Emirates, have already raised prices and enacted similar reforms.
Gulf Arab countries are also facing domestic pressure to create hundreds of thousands of jobs for their burgeoning young populations. Most citizens in the Gulf hold public sector jobs.
To free up more private sector jobs held by expatriates, Saudi Arabia recently announced a measure that would allow only Saudi citizens to work in mobile phone repair and sales shops.
Kuwait's Cabinet on Monday approved the suggested reforms that were made by its own economic committee, but Kuwait's elected parliament will also have to give its backing before the changes are enacted.
Batrawy reported from Dubai, United Arab Emirates.