For workers in the UAE who have become used to receiving their monthly salaries without the government taking a cut, the idea of imposing a beneficial tax must sound like anathema. Especially so for expatriate employees who often arrive in the UAE from countries with punitive tax regimes, and have been attracted here, in part, by the promise of its tax-free environment.
But there are a few rare instances when taxes – usually obfuscated as tariffs, duties or excises – can provide a social benefit. The temporary levy that has been imposed on tourists staying in hotels in Dubai to help pay for the infrastructure required to stage World Expo 2020 is one good example of this.
Another is the idea being considered by the Ministry of Health to double or even triple the price of cigarettes in the UAE. The primary goal of such a price hike is not to contribute to government coffers but to provide a financial incentive to encourage smokers to wean themselves off a habit that is, by any measure, harmful to their health.
But such a measure would also produce a large financial windfall for the government. The question then is what would be the most effective use of those funds which, according to some estimates, could be close to Dh10billion per year?
Elsewhere in the world, taxes on cigarettes are used to fund health facilities that smokers will need later in life. But with most of the population of the Emirates (and the majority of its smokers) being expatriate workers who are likely to return to their countries of origin before the worst long-term aspects of their smoking manifest themselves, that is less of a consideration.
Nevertheless, a portion of the accrued revenues could be used for anti-smoking education projects in schools, for the provision of goods to help smokers kick the habit (such as nicotine patches and gum) and for general anti-smoking public information campaigns.
Overall, the concept of tax should remain foreign to the UAE, but there are times when exceptions ought to be made – especially when there is a clear public benefit involved. This is obviously the case in the examples of both a suggested smoking levy and the expo tax.
