KUWAIT CITY, Feb 22: Minister of Finance Mustafa Al-Shamali has denied news reports which quoted him as calling for hiking tax on citizens or putting a financial burden on the citizens.

In a statement Thursday, the minister said, “What has been stated by the media was a subject of discussion in the National Assembly.”

The minister was severely criticized Wednesday by MPs Hussein Al-Qallaf and Nawaf Al-Fuzai when media quoted him as calling for amending the tax and financial costs Law No. 79/1995 to allow imposing new fees and increase the existing fees on the services offered to citizens with the aim of boosting non-oil revenues and judicious use of facilities and services in the country.

The fury and resentment was not limited to only Members of Parliament but members of the Municipal Council also warned against imposing any fee or tax on the citizens who are currently suffering from high cost of living and bitterness of interests on consumer loans.

The minister’s statement came in response to parliamentary queries submitted by MP Ahmed Lari, in which he stressed the importance of reviewing all support and the subsidies the state offers, in addition to reviewing the salaries, bonuses and allow-ances granted to state employees.

Lari’s questions are related to the 2013/2014 budget on which he has gathered information and said expectations indicate the sale of per barrel of oil by a price lower than the equilibrium price (parity rate) poses a warning to all concerned observers especially in view of expectations of increase in expenditure over the coming years.

The minister also believes the “policy of tightening the belt” is not the best solution to address the budget deficit and he sees the resolution to this effect lies in following policies that would increase revenues and reduce expenses which include setting up an equal price system for all services and goods offered by the state because “it is impossible for the country to continue offering good services free of charge or with token cost.”

The minister suggested closing the gap or the differences in salaries between the public and the private sectors and encouraging investments of productive nature to avoid consumer expenditure lapses which put more pressure on the economy as a result of inflation.

The minister said he hopes the real price of crude oil would not fall under the equilibrium price projected for the fiscal 2013-2014 which is estimated at $98 per barrel taking into account that the equilibrium price of crude oil per barrel had been estimated after reduction of 25 percent of the general revenue for the future generation fund as per Law No. 106/1976.

He noted if the price of barrel falls under the equilibrium point the state would be compelled to pay the mandatory expenses on salaries and also the financial obligation resulting from the existing contracts.
However, he added, the expenditure on other less important chapters will go down as it will not affect work movement in the government institutions and that in this case the contracts on projects, works, goods and services which cannot be postponed to a subsequent stage will be stopped.