2021 Panorama: Economic Recovery Plan Increases VAT and Environmental Damages
2022-01-25 - 4:03 p
Bahrain Mirror (2021 Panorama): The government of Bahrain announced (November 1, 2021) an economic recovery plan after the failure of a similar plan it launched late 2018.
The plan included doubling the value added tax (VAT) to reach 10% starting 2022. The government said that this would increase its non-oil revenues.
The Parliament agreed in a confidential session (December 7, 2021) on doubling the VAT, despite the vast popular rejection.
The session was transferred into a confidential session based on a request of 10 MPs. However, Al-Menbar MP Falah Hashem said that the MPs do not know the names of the 10 MPs who submitted the request.
Online campaigns protesting against the tax considered that the House of Representatives' decision came to confirm that it is only a toy in the government's hand and that it doesn't represent the people.
In the framework of the same plan, the government pledged to launch investments worth $30 billion and employ 20,000 Bahrainis annually, saying that the plan would restore financial balance by 2024.
The government launched in October 2018 a financial balance program that aims at achieving balance in the state's finances by 2020, but failed two years before its due time.
Bahrain suffers from a high public debt, with Bahrain paying more than 700 million dinars in interest to public debt. The International Monetary Fund (IMF) said debt constituted 133% of the country's GDP in 2021.
The plan does not explain in detail how the financial balance will be reached.
In the same context, environmental activists criticized the plan, which included the launch of real estate projects on natural reserves.
The projects included the construction of five cities, two of which were on Fasht Al-Jarem and Fasht Al-Azm areas, which are one of the natural habitats for marine life.
Fishermen warned that reclamation of the lands would lead to a decline in annual fish production. Estimates showed that production would be reduced from 8 to 4 tons only.
The Government did not take these warnings into consideration, but announced the formation of a committee to study the plans of the new cities.
The other 3 cities are not less environmentally damaging as they will be built over Al-Suhaila Island, the Gulf of Bahrain, and the Hawar Islands.
Environmentalists said such projects would kill the remaining coral reefs in the north of the country.
Such real estate projects do not benefit real estate developers from banks and companies.
Similar projects set up by the government at the beginning of the new millennium have destroyed many reserves and reduced annual fish production by nearly a half.