Citizens of most of the developed countries are used to living with indirect or direct taxes, irrespective of what they get in return from their governments.
While here in the Gulf region, including Oman, citizens and expatriates are used to availing different types of benefits from their governments through subsidies and a variety of welfare schemes.
The situation is going to change this year for the first time when Valued Added Tax (VAT) on most of the non-essential commodities will be introduced in the country. Adding to that, electricity and water will go up with the gradual removal of subsidies from this year.
SPENDING
For citizens and residents of Oman, for the first time how they spend will be key to how they will save for the future.
Speaking to the Observer, an analyst said, “As all basic items, including health and education expenses, will be exempted from VAT, the impact on the cost of living will depend on one’s lifestyle.”
The prices of the luxury items such as cars, jewellery, cosmetics, and accessories will cost more, but it is the increase in utility services that will have an impact on our lives.
“The luxury products are one-time purchases and customers will not mind a marginal increase. Most of the expatriates are used to stricter tax regime on various services and products,” said a senior officer of a company that distributes luxury brands in Oman.
“What customers must worry about is the electricity bills, which will naturally have an impact on all goods and services. The current slack in the rental market will neutralise the price impact, but what the people have to think is about the long-term and realise that new services, even if it is their right, will come for a price.”
Already many apartment owners have started installing prepaid meters for electricity, smart ones for water and even solar roof panels, which will also offer a solution to their tenants, including shop owners.
“We are living in a digital world and everything will depend on electricity and its use, even for running of vehicles. It is important to spread awareness about no-wastage and rational use of all resources irrespective of where we are,” a senior employee in one of the utility companies said.
“Even if they go to a hotel paying good rates, they should just not waste electricity or water only because the intention is to recover the cost of the hotel stay. Rational use needs to be applied everywhere, be it a hotel, office, or home,” he said.
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