Tax unhealthy food to reduce its consumption: Qatar PwC

unhealthy-foodA suggestion for taxing “unhealthy food” in Qatar has been made to reduce its consumption and help government realise its 2030 vision of a sustainable healthy society.
In its “Qatar economy watch” PwC said, “By shaping incentives to reduce consumption of unhealthy foods by introduction of new taxations the government can support its 2030 vision of a sustainable healthy society, while also raising non-hydrocarbon revenues.”

To meet the nation’s non-hydrocarbon financing goal, a “larger non-hydrocarbon revenue base” is required. This can be achieved by shaping incentives around key focus areas. For example, like other GCC countries, Qatar is at risk from high obesity and diabetes levels, it said.

When building this revenue base, PwC said it was important levies are enacted in ways consistent with certain principles.
These may include introducing incentive shaping measures on a small and gradual scale in order to not provoke extreme reactions; levying areas of issue consistent with achieving Qatar’s National Vision; and considering distinctions and cultural differences between Qataris and non-Qataris.

According to PwC, increased governmental expenditure and growth in governmental services are key to the diversification efforts of the Qatari government.
In order to manage expenditure efficiently and avoid inflation volatility, performance metrics should be introduced into the budgeting processes by linking budgeting of funding with national strategy and planning.

Ministries and the QCB have a leading role in the implementation of performance based-budgeting, it said. This involves a move from annual to multi-year budgets, implementing accruals accounting rather than cash, utilising an appropriate IT system to monitor and measure performance through specific indicators more effectively.

To implement this, the ministries will need to build their capabilities in forecasting, budgeting, accounting and measuring performance.

The budget reform process should be inspired by international best practises and standards, but adapted to the specific context, strategy and capabilities of Qatar. “Qatar should take advantage of its current position by building its macro-fiscal capabilities to meet the 2030 National Vision,” PwC said.

Building this capability will aid Qatar’s goal of achieving an AAA credit rating, help to develop a business environment attracting private and international investors, diversify the economy and ensure prudent management of the budgetary process.

One of the prerequisites for an effective monetary policy is a deep and liquid local capital market and active sovereign debt market.

Qatar’s equity market is the third largest by market capitalisation in the GCC and has attracted more trading volumes following its graduation into the emerging countries group by MSCI in May 2014.

However, the number of equities listed on the stock exchange is low at 43 with only one IPO in the last four years, suggesting a scope for further growth, PwC said.

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