RIYADH, Oct 20: While Saudi Arabia embarks on a series of projects, at an estimated cost of $50 billion, to increase its crude oil production to 12.5 million barrels per day by the year 2009, it has once again raised the issue of extremely high taxes on oil in the consuming countries, the Saudi finance minister revealed to the press.

Finance Minister Dr Ibrahim Al-Assaf told the Saudi press Agency that while talking to the International Monetary Fund (IMF) Managing Director Rodrigo de Rato on Tuesday the Saudi King Abdullah emphasized on the need for the industrialized countries to play their part in stabilizing the global crude markets by either lifting or reducing taxes on oil products.

“King Abdullah told the IMF chief that the industrialized countries should not impose taxes on petroleum products at all or reduce them in order to lessen the burden on consumers,” Dr Ibrahim Al-Assaf told the press.

Al-Assaf, who was present at the meeting, said the king had emphasized that Saudi Arabia would continue its efforts to stabilize the oil market and that Rato had commended Saudi oil policies.

Maintaining taxes at the current levels would impact on the future investment in oil producing countries and on the petroleum market in general.

Dr Nahed Taher, senior economist at the National Commercial Bank, told the Saudi daily Arab News that “OECD (Organization for Economic Cooperation and Development) countries are always complaining that high oil prices are leading to recession and lowering the demand for goods and services in the world economy, but the higher oil prices and the subsequent increase in the cost of producing goods and services are mainly coming from the higher taxes that these countries impose on their internal consumers of oil.”

She said some countries were imposing taxes as high as 75pc of the total cost of oil. “As a result, these countries make an income which might be three to four times what the oil producing countries make from higher oil prices,” Taher pointed out. As an example, she said, the money Italy makes out of oil taxes is three times more than what the UAE makes out of oil exports. “That means that if the recession happens or the demand for goods and services is lower the reason is the taxes on oil consumption rather than the higher oil prices,” she argued.

Speaking to reporters after attending a meeting of GCC finance ministers in Jeddah, Al-Assaf also said that Rato had praised the kingdom’s plan to use part of its surplus budget for welfare projects and cut down public debts of SR600 billion.

“We are working continuously to reduce public debts and there is good progress in this respect. God willing, we’ll announce the remaining debts by the end of this year,” the minister said while answering a question.

Al-Assaf said the kingdom had approved the applications of GCC banks to open their branches in the country, adding that the Emirates Bank International had already opened its branch. “GCC banks which want to open their branches in the Kingdom will face no obstacles,” he added.

Al-Assaf denied reports that the Saudi Arabian General Investment Authority had urged the Finance Ministry to cut down corporate taxes. “We have already brought down income tax to 20 per cent, which is a competitive rate compared to other countries,” he explained.