Collecting taxes from expats ‘unconstitutional’

KUWAIT: Kuwait cannot collect income tax exclusively from expatriates in accordance with the constitution, but can instead take fees on services provided by the state, a constitutional expert said. “Democratic systems link between taxes and citizenship as a way by which taxes can fund public activities based on the citizen as a constant and stable element of the state,” said Dr Mohammad Al-Feeli, a constitutional law professor at the state of Kuwait.

He explained that under this condition, Kuwait cannot take taxes from expatriates alone based on the concept that foreigners are considered ‘not constant’ elements of the state, and therefore “the state’s treasury cannot be funded by a non-constant element.” “Taxes cannot be forced on [Non-Kuwaiti] residents according to the constitutional concept pertaining with the state’s stability,” he further told Al-Rai daily.

Dr Al-Feeli argued in the meantime that Kuwait can still adopt taxes as long as it covers Kuwaitis and expatriates alike. “The tax is an amount of money taken from every person living in the state, and linked with a group of public services,” he said. On the other hand, he explained that fees are collected from those who enjoy certain services, and thus can be collected either from citizens, expatriates or both.

The idea of introducing taxes is one of many mulled in recent years as Kuwait looks to cut spending and create alternative income sources in order to avoid a projected budget deficit in 2021, in light of the country’s dependence on oil as the sole source of income currently. Another proposal discussed recently called for ending expatriates’ access to subsidized services such as fuel and energy, while rationing subsidization of Kuwaitis through categorizing consumers based on their consumption rates.

The proposal received mixed reaction in the parliament where some MPs believe that it cannot be implemented for humanitarian and economic reason, while others argue that it can help save hundreds of millions on the national budget. In an update to this story, sources inside the parliament’s legislative committee said that the government’s step to study that proposal is ‘correct from a legal standpoint’, and used subsidized food as an example to back up their argument. “Prices of food items provided to citizens through the Tamween (supply) cards are different compared to their prices in the market where expatriates can only obtain them,” said the sources who spoke on the condition of anonymity.

The Tamween card allows Kuwaitis to have access to a certain amount of basic food items for a subsidized price every month. A citizen would have to pay the market price for any items that exceeds his monthly quota. The sources said that a similar system can be adopted when it comes to fuel and energy consumption in Kuwait.

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