|
"The
VAT will help put an end to the huge waste of
resources in all aspects of life in the UAE, from
packaging materials to transport, and will also end
the excessive use of manpower, which is relatively
cheap but shows up as a huge cumulative expense in
balance sheets," Dr Humam Al Shamaa, a
financial consultant at Abu Dhabi-based Al Fajer
Securities, told Emirates Business.
He said 85 per cent of goods consumed locally are
imported, unlike the situation in most other
countries, where imports constitute no more than 66
per cent of total consumption.
"The more consumption falls, the more imports
fall. Therefore, the new suggested taxes and charges
should be related to controlling wasteful
consumption. For example, shopping malls will
consider selling polythene bags to customers rather
than providing them for free after VAT is
imposed," Al Shamaa said.
"VAT will also change the consumer's
preferences and will push him to re-structure his
needs under its burden. This re-structuring means
concentration on basic goods and reduction in the
purchase of luxuries, which will reduce the
commercial imbalance during these difficult
conditions.
"The present climate is the most suitable for
applying the VAT. The local and global economy will
now see a fall in prices and this will prove false
all warnings we have been given of an increase in
inflation if taxes were applied and other charges
increased," he said.
Al Shamaa also justified the immediate imposition of
VAT by saying: "After the big fall in oil
prices, the available financial resources are only
the country's overseas investments in sovereign
funds.
"Any attempt to liquefy overseas assets is
unacceptable because it will change paper losses in
the sovereign investments into real losses. Imposing
the VAT is the best available alternative for the
country, not only to increase liquidity but also for
financing current government expenditure and
maintaining a modicum of economic stability,
especially if oil prices fall further," he
said.
Source
: Emirates Business 24/7 - Dubai, Dubai,United Arab
Emirates, dated 31/12/2008
|
