Economy, VAT dominate discussions among voters in Bahrain’s local elections

As Bahrain gears to hold its fifth parliamentary and municipal elections, the impending implementation of Value-Added-Tax and rising inflation rate are driving discussions between candidates and voters across the island-kingdom.

The general elections for the lower house of parliament and the municipality council will be held on November 24 with many districts expecting to hold a run-off vote on December 1 as independent and past Members of Parliament are expected to fight incumbents for their seats.

But a key issue across the governorates is the topic of VAT and how it may affect constituents in the coming year. Bahraini legislators approved a draft law on October 7 that would impose VAT for the first time in the kingdom, starting from 2019. Saudi Arabia and the United Arab Emirates are the first two countries introducing VAT at a 5 percent rate, as part of a Gulf Cooperation Council (GCC) agreement in 2018.

Top priority

“VAT, health Insurance and housing are the top priority for voters at the moment in all areas in Bahrain. I would say it is a very crucial time that calls for experienced and well-educated professionals when it comes to candidates due to the financial situation concerning VAT and health Insurance in particular,” Faten al-Haddad, a Bahraini lawyer who will be voting in the Capital’s fifth district, told Al Arabiya English.

The past four years have been tough for many citizens as global oil prices plunged which has led to the difficult task of the Bahraini government in introducing several measures like subsidy reform, VAT, cost saving in the public sector and even possible talks of pension cuts.

“In 2014, many MPs came in promising wage increases, increased benefits and pensions and better services in their constituencies,” Mohammed Al Sayed, spokesperson for Citizens for Bahrain – a group that monitors and analyzes elections as an independent volunteer group, told Al Arabiya English.

“Yet with oil revenues beginning to bite at almost exactly that time, it proved a very difficult moment for MPs to come in and have an impact. Instead of improved standards of living, MPs spent the last four years fighting against various spending cuts; and of course many of these cuts were necessary to prevent Bahrain getting dangerously into debt,” he added.

Hotly-contested constituency

In Bahrain’s hotly-contested Southern Governorate’s fourth constituency, Anas Bomtaia is expected to challenge incumbent Mohamed Yousif al-Maarafi and force a run-off vote two Saturdays from now. At his election headquarters in the conservative district that encompasses the area of Hajjiyat and parts of Sanad, voters told Al Arabiya English that the economy and how each voter would tackle those issues was the key factor in deciding how they were voting.

“The last parliament was not able to challenge and effectively communicate our concerns about VAT and rising costs and inflation that will undoubtedly hurt the pockets of hard-working citizens,” Abdullah Ahmed told Al Arabiya English. He said he was voting for Bomtaia against incumbent al-Maarafi because the younger first-time candidate has a solid plan on tackling the issue of VAT.

“While we can all agree that Bahrain is not unique in experiencing tough economic times in the Gulf Arab region, we need to have a tough discussion in the next parliament on the mechanism for implementing VAT. A key part of my program would focus on how the legislative branch can propose a bill in which the government can impost VAT but at a proportionate rate that would not affect low and middle-class income citizens,” Bomtaia told voters on Monday.

Economic constraints

Since the government has largely spared low-income households from benefit cuts and exempted business persons and corporates from tax hikes, the middle class has been left to bear the burden of the country’s fiscal adjustment, said Hasan Alhasan, a PhD researcher at King's College London, to Al Arabiya English.

“There is a perception that the broad outline of Bahrain’s economic and social policies is decided primarily by the government, especially in response to pressure from external creditors and global credit rating agencies,” said Alhasan, who is a former senior analyst at the office of the First Deputy Prime Minister, to Al Arabiya English. But he says that parliament neither has the power nor the expertise to tackle such issues and this was illustrated by the government’s release of a Fiscal Balance Program in October 2018 while parliament was out of session.

“Despite parliament’s shortcomings, many voters are likely to make it to the polls to make a statement in defiance of calls by certain opposition groups to boycott the elections,” he said.