To boost revenues amid dropping oil and gas prices and at the same time tackle the country’s rising obesity rates, Qatar may want to consider introducing a tax on unhealthy food, a major accounting firm has said.
In a recent report on Qatar’s economy, PwC mentioned the strategy as a method to lessen the government’s reliance on hydrocarbon revenues, and also suggested other ways of “shaping incentives around key focus areas.”
Shifting consumption patterns through taxation has long been a favored policy tool by economists and politicians alike. Among the most common examples are tobacco taxes that are intended to reduce smoking rates by making the habit more expensive.
More recently, policy makers and health advocates abroad have turned their attention to using so-called “sin taxes” to discourage consumption of sugar-laden drinks and food to combat rising obesity rates.
In November, residents of a city in California became the first in the US to vote for a levy on soda, sugar-sweetening juices as well as sports and energy drinks, among other beverages.
PwC picked up on this trend in its report, offering it as an example of how Qatar’s government could diversify its income sources:
“By shaping incentives to reduce consumption of unhealthy foods by introduction of new taxations the government can support its 2030 vision of a sustainable healthy society, while also raising non-hydrocarbon revenues.”
Such measures are generally opposed by beverage companies, which stand to lose sales. In fighting against sugar taxes in the US, industry organizations have argued that consumers should be free to drink the beverage of their choice without sanctions.
While PwC did not explore or discuss the concept in detail, a tax on unhealthy foods in Qatar is a new suggestion in a nation grappling with one of the highest rates of obesity in the world.
Like many countries, Qatar’s efforts at addressing the issue have so far been focused on public education and encouragement for its residents to become active through initiatives such as National Sports Day.
However, in one of the latest illustrations of the rising problem, officials at Hamad Medical Corp. told Al Sharq newspaper this month that they conducted 900 bariatric surgeries in 2014, a 55 percent increase over the previous year, the Gulf Times reported.
Fiscal picture
While the effectiveness of taxes on unhealthy foods in fighting obesity remains to be seen, such measures are almost guaranteed to raise revenues for the government.
PwC notes that Qatar has set a goal to cover all its government expenses with non-hydrocarbon revenues by 2020.
Progress toward meeting this target has been limited, the company said, and the recent plunge in oil prices has added a new sense urgency to finding other revenue streams.
Over the next two years, PwC estimates a gap of $62.5bn between total government spending and revenues not linked to oil and gas production.
Meanwhile, in its most recent economic outlook report, Qatar’s Ministry of Development Planning and Statistics highlighted this challenge:
“Oil and gas resources are exhaustible and Qatar will one day have to look to other sources of income to meet its needs.”
At the same time, while consumption taxes were previously discussed within the GCC, the political appetite for such measures faded in the aftermath of the Arab Spring as many governments sought social stability by increasing financial benefits to citizens.
However, recent volatility in energy markets has prompted some financial experts to call on Gulf countries to revisit the idea.
According to the Qatar Central Bank, oil and gas revenues accounted for 56.3 percent, or QR195.2 billion, of the government’s revenues in its 2013-14 fiscal year. That was followed by investment income – which shot up due to accounting changes at Qatar Petroleum – at QR102.9 billion, or 29.7 percent.
Fees and various taxes declined by more than one-quarter to QR48.5 billion, or 14 percent of government revenues.
Thoughts?
If they are willing to put tax on junk food, how about subsidizing for the organic and healthier food, particularly fruits and vegetables?
Locally produced tomatoes, broccoli, and cucumbers are MUCH cheaper than imported produce and increasingly available in stores. It is not organic certified, but the production quality is a high standard.
Good point – the local stuff is pretty good.
Qatar’s future, at least food-wise, lies in breaking it’s dependency on imports, and Aeroponic growing is perfect for Qatar: acres of space, desalinated seawater and year-round sunshine!
I think it makes more sense to double the price of petrol and make locals pay the real price of elecricity and water without subsidy. Another option would be to introduce a small tax on expats wages, but this means Qatar will not be as attractive as other GCC countries for job opportunities.
Expats are already indirectly taxed! Prices and rents are exorbitantly high because of indirect taxation disguised as profit markup. The locals are shielded from these indirect tax by all the financial benefits they are getting.
I wouldn’t call that indirect taxes as it goes to landlords not to the government
I don’t think that Qatar will go down the road of taxing expats. It is already hard enough for them to get people here and at the first whiff of a tax people will pull out. Companies would have to increase salaries to cover the tax cost so in the end it is the company that has to pay. Making everyone pay for the utilities they use would be a much better way of working this. Also the artificial cost of fuel needs addressing. Having all this said the powers that be don’t want to do this as they want to stay in power. Fun and games.
The government is the owner of many compounds!
Only Barwa and Ezdan, and they are cheaper than most other compounds/apartment blocks, though still not very cheap.
Since all businesses are partly owned by Qataris, a substantial part of riyals spent here goes back to them. In a way expats give back a big chunk of their salary to Qatar.
you don’t get it do you.. instead of taxing residents directly and have the wealth distributed by the government, residents pay rents directly to landlords who are locals. thus the wealth is distributed directly to the locals
The point of the tax system is to give the government enough financial resources to build and maintain its services, roads, institutions, etc. In the case of Qatar, distributing wealth as you are saying among citizens is stupid, as Qatar is already doing more than enough with its citizens. When the government is short on cash, the government needs the cash in its coffers not in its citizens pockets.
Qatar did not have any problems on not putting tax on expats’ wages. So why should they implement it now? As you have said, even the government subsidizes for its locals for their electricity and water bills, this is without tax. This just implies that Qatar suffers no financial crises and Qatar is actually more than self-sufficient. I see no point in implementing taxes now. Where would it go anyway?
I think you are aware that with the decline in oil prices revenues will fall and pressure on the governemnt to find alternatives will grow. Therefore taxing expats is one of them and is not a new thing anyway as it has been in discussion within the GCC for some time, but now it might become more crucial to implement it.
How is this going to help the local population lose weight?
I am commenting on the part that says such taxes would help boost revenues amid declining oil prices. But I don’t think taxes on junk food will help anyway.
What about the subsidized prices of electricity and water expats pay? Should they be kept the same?
I don’t know if they are subsidized or not. If they are then of course expats also should pay the full price 🙂
This would be a pointless tax for fighting obesity and would only raise revenue for the government. Qataris who have a huge obesity problem have the financial muscle to still buy whaever they want, however if would impact lower income expats. So in reality the expats would benefit from this as they would eat less junk.
Levying tax against unhealthy foods simply will not work. I’m actually a registered Nutritionist, and I can assure anyone reading this that the only way to reduce obesity in Qatar, or anywhere else, is to educate people on making healthier choices, and to promote exercise.
I have many Qatari friends and clients, and as a general rule, over-eating isn’t a problem. With all due respect to the people of Qatar, the problem lies in their woefully sedentary lifestyle… exercise is almost unheard of.
If you’re reading this and want your family to live long healthy lives, avoid sugar wherever possible, and get your family outdoors in the evening and at weekends. Here’s a few ideas:
1. Walk the Corniche. From The Sheraton to the MIA and back is about 14K.
2. Get a bike. Ceremonial road is a great place to ride, and very safe. Roundabout to roundabout and back is 20K.
3. Mountain biking (Mountains??? In Qatar??). There’s a 5k Mountain bike loop around Duhail, a 26K loop around the perimeter fence at Lusail circuit, or at the weekend you can get out to Zekreet.
While I agree with much of what you have posted I have to disagree that the Ceremonial road is a very safe place to ride. Many times I have seen cars driving down the bike/walkway. You might say it’s safer than riding on the road.
indeed it is!
That’s a fair point. I’ve seen a few Landcruisers blasting down the cycle lane – my Strava actually once picked up my swerve avoiding one 🙂
Generally much safer than elsewhere in Doha though, and you have the backup of lots of other cyclists to look out for you..
Where is this Ceremonial road?
Coming from Landmark Mall/Ezdan Mall, head towards Ikea and hang left. it’s 5 minutes from there.
If you’re stuck, punch ‘National Day Ceremonial Road’ into Google Maps. start point is the roundabout on the junction of CR and Al Zaghwa St.
You are a registered Nutritionist and you think over-eating isn’t a problem here and exercise is the solution? a 14 kilometer walk twice a week like you suggested would approximately burn how many calories? ( I’m estimating around 2000-3000 calories based on varying weights and speed it is covered with). Now lets add in a regular serving of french fries from McD or KFC for 3-4 times a week. There goes that calorie difference.
You cannot out train a bad diet is a fundamental rule of fitness. But what do I know? I am not a registered Nutritionist.
There’s around 230-250 kilocalories in a portion of French Fries. For an adult male at around 80kg, walking at around 5kph, you’d have to walk for around an hour to burn that off.
That said, the calorific content of the French Fries is NOT the problem. The problem lies in the way your body processes simple carbohydrates and trans fats.
If you’d read through my comment, I didn’t say you can out-train a bad diet, I simply said that in my experience, it’s the lack of exercise thats the most pressing issue.
In my experience, every single person has very different requirements when it comes to nutrition and exercise, and it’s impossible to generalise.
That said, even I don’t have that many friends or clients who eat at McDonalds 3-4 times a week. If you do, tell them to Google me 🙂
You would have to define portion when you refer to French Fries and state 230-250 calories. A standard regular pack of Mcdonalds fries is 480 calories published on their site and medium fries that come with most meals is around 685 calories.
Again, since I’m not a registered nutritionist, I can only give my uneducated guess that most overweight people in Qatar do frequent fast food chains at least 3-4 times a week( if not more). Like you said, an hour of walking is not going to do anything for these people who go over their maintenance calories by huge amounts.
While walking an hour a day is a healthy and good cardiovascular habit, it is not the solution for the overwhelming portion of this country and they need to be educated on dietary requirements more than exercise habits.
…here, Over eating and over drinking tea/coffee is number one, exercise is number 2.
The main people affected by this would be the poorer residents, for whom junk food provides the cheapest way to get large numbers of calories. It the same in most developed countries: fresh fruits and vegetables are simply too expensive.
Fat locals and expats can afford a box of doughnuts whatever the price.
Why not go after smoking instead: make it illegal in public spaces (and enforce it). Triple the price of cigarettes and other tobacco products.
This plan is genius, I can just imagine it now, “what, a donut now costs 6 instead of 5! That’s it, I’m eating apples from now on”
Finally! Thank you. All the junk food that poison people with no knowledge of nutrition!
The haram food that people here are obsessed with, it is actually where most people go to eat
Eat bacon. Die happy.
LOL, looks like the PWC “experts” were sitting in their London Offices while imagining a “solution”.
Good to know that someone is imagining a solution. Meanwhile people keep dying from diabetes related health problems.
Another overpaid pwc report rehashed from their book of miracles that was suggested to the uk ten years ago.
Education is the key.
How about a fat tax? The fatter you are, the more tax you pay! Pretty good incentive to not be obese right there.
What about levying tax for fat people (with all respect)? Maybe that way they might push themselves to lessen their intake and do the necessary exercise (in response to government’s attempt to fight obesity). For each excess pounds has a corresponding tax.
Junk food has been here since forever, obesity in Qatar has only became an issue recently. It is our life style which has been changed! Bring back sport as a pass or fail subject into schools like before, and force weight control laws like exess fees due to the increased cost that obisity imply to our health system! Taxtion has never been the solution to such an issue.
Why not just tax cigarettes and sisha? It will help generate government income and push young people and expatriates away from it.
How about putting up health warning signs in junk food outlets and their packages “CONSUMPTION OF JUNK FOOD IS A MAJOR CAUSE OF OBESITY” ?? It is just a thought, because imposing tax is anyway not going to be a deterrent.
Brilliant, now all we need do is find an organisation that could help the government implement a complex, time consuming and incredibly expensive new tax infrastructure. Anyone know of anyone, maybe a major accountancy firm that might be able to help? #BlatantSalesPitch
A tax only works in a society where people have more or less the same income level. Increasing the price of a bottle of coke to QAR 50.. still cheap for some. If it’s to compensate for the oil/gas price, then just call it VAT (Value-added tax) please.
Qatar needs to think very carefully about an alternative revenue stream for when it’s oil and gas runs about because when it does the world will treat it very differently than it does now.
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