Taxes on junk food, luxury items to be rolled out in Qatar soon
A draft law governing new “selective” taxes has been approved by Qatar’s Cabinet and could be implemented as early as April this year.
According to QNA, the tax will be “imposed on goods harmful to human health and the environment,” as well as specific luxury items.
Officials in Doha had first warned of the upcoming sin taxes last June, but said they would apply to tobacco, fast foods, and soft drinks.
It is unclear what a selective tax related to the environment or luxury goods would look like.
QNA added that Qatar’s law was prepared in accordance with a unified GCC agreement. It did not state when the tax would be rolled out.
But the International Monetary Fund (IMF) said Qatar’s sin taxes would start this year.
And last month, Saudi finance minister said they could be introduced across the GCC in April.
The Gulf is also on track to introduce a separate, value-added tax in 2018.
That consumption tax will most likely affect businesses. It is expected to exempt certain food items, as well as the cost of education, healthcare and social services.
The decision to impose sin taxes comes at a time when Gulf countries are seeking additional revenue streams due to lower oil prices.
But another incentive to impose the fees could involve rising healthcare costs.
Qatar and other GCC nations heavily subsidize healthcare for their citizens, and the growing prevalence of diseases like obesity and diabetes are taking their financial toll.
By 2020, Qatar’s healthcare costs are expected to double to $8.8 billion a year as it contends with a larger, older and sicker population, Alpen Capital said.
BMI Research has forecast that the region will take these rising costs into account. In a report this month, it added that the longstanding obesity epidemic will be a key driver of policy decisions in the coming years.
Meanwhile, taxing luxury goods could provide residents a financial incentive to spend within their means.
That’s no small feat in Qatar, where 75 percent of the local population is in debt.
A Qatar University study found this was in part due to social expectations on nationals to buy the “right” watches and handbags.
There is also pressure to have the “right” furniture or chocolates to offer guests, and to attend parties and give expensive gifts.