The recent government decision to increase gasoline prices comes following a period of uncertainty towards the economic situation. Throughout 2017 citizens have witnessed a major shift in the market with an increase in general expenditure. While there is a common understanding for the economic challenges facing the country and the region, the public were generally not well aware of government intentions to cut subsidies or increase gasoline prices beforehand.
In 2016, there was a sudden announcement of a 60% increase in gasoline prices causing a panic to citizens who are used to stable pricing in the market and are completely dependent on government subsidies. This was repeated late last month when the government announced around a 30% increase in gasoline prices overnight.
As Bahrainis, many of us do understand that we cannot be dependent on government subsidies whether its gasoline or other commodities. However, certain steps should be taken to prepare citizens for such major shifts in Government policy especially the ones affecting their daily lives and expenditure. The Government has arguably not done the necessary groundwork in preparing citizens and building awareness of their shared responsibility towards the nation.
The simple fact is that in a climate since 2014 of significantly lower oil revenues, Bahrain as a nation must dramatically reduce its public sector spending to avoid finding ourselves faced with a catastrophic debt crisis. Therefore the Bahrain Government and other GCC states are correct in both reducing spending by different ministries and following through on a radical overhaul of subsidies; along with new methods for boosting revenue, such as taxation.
However, the challenge is ensuing a constructive public debate so that citizens understand the need for such reforms for the sake of protecting our nation’s long term creditworthiness. The problem is that too many citizens struggle to understand the wider context of these changes, and don’t feel they are being listened to about the impact of such measures on standards of living.
Another decision that was made recently is the selective value-added tax added to certain products such as tobacco and soft drinks. The government has certainly made the right choice to impose taxes on the most hazardous consumer products in a start to a series of taxes to be imposed in the future as discussions are currently taking place to impose a value added tax and cut down on more subsidies.
For Bahrainis, the idea of paying tax is a significant psychological threshold. The traditional attitude has been that as a nation reliant on its oil wealth, Bahrainis can look to their leadership for education, healthcare, housing and services, without having to pay anything in return. As Bahrain moves away from unsustainable reliance upon oil, such a social model is no longer realistic. However, this reality will take time to gain public acceptance.
The role of the Parliament has been vague, as MPs have just been vocal without the ability to take serious steps towards the government decision. This is yet another indicator of the weakness of our parliament and the general lack of effectiveness of MPs – an unhealthy factor in a period leading to the parliamentary elections. Indeed, MPs themselves don’t appear to have been briefed prior to the latest round of subsidy reforms.
People are increasingly losing faith in the Parliament and the democratic process due to the weakness of MPs reflected by government decisions that sideline the existence of the Parliament. HM the King has instructed the Parliament and government to work closely on subsidy reform, following the recent government decision and this is a step that many of us hope would be fruitful.
The Parliament and government should not just work on the technical side of subsidy reform or imposing taxes. Bahrainis need to be aware of what’s coming their way, people need to understand the economic challenges, the subsidy cuts, the system of paying taxes and how they can benefit from such moves on the long run.
The Government currently acts with a lack of visible strategy as building awareness of such big issues should be a part of any decision to be taken and a certain level of transparency is expected in a young democracy where citizens should understand why they have to pay taxes, why gasoline prices are increased and what’s in it for them.
Major steps should be taken to reach out to citizens to build a common understanding of the economic situation and their responsibility towards their country rather than making citizens live in a status of uncertainty towards future challenges.