The parliament in Bahrain will soon pass a re-crafted bill with proposals of collecting a 2% tax from remittances done by expatriates in order to supplement its economic muscles. Upon the bill being passed, this levy would see the new levy charged on monies forwarded overseas from expatriates workers as such action has triggered an unending row of controversy from among parliamentarians, the expatriate fraternity and entrepreneurs.
Proponents of the bill are of the view that the remittance tax can significantly contribute to the national economy by providing a new source of revenue. They cite the fact that other countries in the region have successfully implemented such measures, making sure that part of the income earned by emigrants is returned to the locality for reinvestment. Proponents further argue that the funds could be used for public services and infrastructural development.
But the critics of this tax caution that it might burden low-income expatriates who constitute the bulk of the Bahraini workforce. It would impose an undue financial burden on such workers and result in a cutback in remittance flows to their families back home. In fact, the business leaders argue that the decision might discourage foreign talent and investment and hence adversely affect Bahrain’s economic competitiveness.
With the parliament vote looming, the proposed remittance tax on expats reiterated the broad difficulties in reconciling fiscal management with further economic integration. The result of this vote will likely define debates on overseas citizens’ contributions and foreign workers’ roles within Bahrain’s changing economy.
