Yemen needs serious taxation reforms [Archives:2005/823/Local News]

March 10 2005

A recent study says that taxation reforms in Yemen have not achieved their desired goals. Despite a new law, called the General Tax on Sales, aimed at integrating taxation measures, its implementation has been postponed because of objections by businesspeople.

The study says the government revenues from taxes are limited and fluctuate significantly. The study confirms that tax reforms need better management and must create increases of between 50 and 75 per cent, in order to make important increases in revenue.

Economic experts affiliated with the World Bank have recommended taxation reform including the simplification of the taxation structure, expansion of the tax base, and a unified consumer tax. The experts argue that reforms are inevitable if national income is to increase, which is crucial with Yemen's oil expected to be depleted by 2012.

The government now intends to lift the official subsidy on diesel and save the money for other areas. Lifting diesel subsidies is controversial, however, and is facing objection by the parliament, the people and the opposition parties.