Kuwait can't levy taxes as services not good enough -parliament

KUWAIT, April 30 Tue Apr 30, 2013 3:23am EDT

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KUWAIT, April 30 (Reuters) - Kuwait cannot start imposing taxes on citizens because the quality of public services in the Gulf Arab state is not good enough, a parliamentary committee told the International Monetary Fund, local media reported on Tuesday.

The IMF, which has sent a team of experts to the major oil producer before preparing its regular annual report on the country's economy, has said the government needs to include the tax system in its fiscal reforms.

Income is not taxed in Kuwait, one of the world's richest countries per capita, and water, electricity and petrol are heavily subsidised.

"The committee has rejected in its meeting to impose any taxes on citizens especially (given) that the level of public services is not good enough," member of parliament Yusuf Zalala, head of the assembly's financial and economic affairs committee, was quoted by the daily Kuwait Times as saying.

The IMF has calculated that Kuwait may exhaust all its oil savings by 2017 if it keeps raising state spending at the current rapid rate. The international body therefore wants Kuwait to expand its tax base, to provide stability in case of any sharp fall in oil prices.

Some members of parliament have suggested that foreigners, who make up around two thirds of Kuwait's 3.7 million population, should pay more for services, but others have argued this would dent the country's appeal to foreign companies.

Political infighting and bureaucracy have held up economic development in Kuwait, and its public infrastructure and services, from telecommunications to garbage collection, lag other states in the Gulf such as the United Arab Emirates and Qatar.

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