Oman plans to amend labour laws, introduce new taxation and end some "long-standing" subsidies while ensuring that low-income families are protected, the Gulf Arab state's foreign minister said on Saturday.
Sayyid Badr Al Busaidi told the IISS Manama Dialogue summit in Bahrain that significant changes to labour policy would include abolishing a clause that required expatriate workers to secure permission to be able to work under a new employer, which is known as the no-objection certificate system.
The sultanate is currently in the process of removing the system to give residents more opportunities to change jobs without having to wait two years to change employers, as was the case previously.
But Sultan Haitham bin Tariq said in his National Day speech on November 18 that the government was keen to continue to help low-income Omanis.
The finance ministry said in April that the country spends about 600 million rials ($1.5 billion) a year on subsidising electricity and water for local consumers.
Oman discontinued its fuel subsidy two years ago.
Oman plans to introduce a tax for the highest earners, making it the first country in the Arabian Gulf to introduce income tax.
A five per cent valued added tax will also be introduced in the second quarter of next year, following similar moves by the UAE and Saudi Arabia in recent years.
Low earners are classified as workers who get between a wage of 325 rials ($813) and 500 rials ($1,250) a month.
Low-income earners will still not be affected by the removal of subsidies and they will continue to get free housing.
Analysts praised the decision to put the burden of financing necessities on those who can afford it, while protecting those on a lower income.
"They would not be able to survive if they have to pay higher water and electricity bills or if the government stops giving them free housing. I don't see any problem for high earners to pay tax or for the rest of us to pay VAT. It is time we help the government pay for the deficits," economist Salah Al Jardani said.
Oman has had a chronic budget deficit over the past five years and in the current year the figure stood at 2.8 billion rials ($7 billion).