“WE are ruined. This city has become impossible for us to live on in the wake of new taxes imposed on expats from Jan 1. And Pakistan holds no options, either,” says Nadeem Malik, who is in his early 50s and weighing options to return in any case.
Pakistani expats have started withdrawing from Saudi Arabia in large numbers. The malls are empty, and Pakistani students’ enrolment in the Pakistani consulate school has also seen a sharp decline.
There were happy times, when taxes were almost non-existent and much of the money earned was saved. This is no more the case. The king has imposed heavy taxes and fees that cannot be borne by even those who were until recently being bracketed in the considerably high-income groups, says Mr Malik. Expats say that the Saudi government has imposed a heavy dependency fee on each family member besides overall increasing fuel prices, electricity prices, as well as imposing a five per cent value-added tax (VAT) on all services and products.
Explaining the increasing costs here, Murtaza Ali from Lahore says that the Saudi government has imposed SR100 per month per person dependency fee from the current fiscal year and the cost will escalate to SR200 in the next financial year, SR300 in 2019 and SR400 in 2020. All iqama holders are supposed to pay the dependents’ fee upfront for the year along with the iqama’s renewal.
Expressing concerns about the dependents’ fee, Mr Ali says that it has become almost impossible for even a small family with three children to survive in Jeddah. “Earlier, even those earning around SR5,000 to SR6,000 per month were leading contented family lives,” he says.
Rubbing salt into the wound, another Pakistani Sultan Qureshi says, the Saudi government has increased petrol prices from over 200pc to 300pc. From Jan 1, the Super and Hi-Octane per litre prices have been increased from SR0.91 and SR0.95 to SR1.37 and SR2.04, respectively.
Bewailing that the increased electricity bills from next month will break even those planning to fight the tough economic situation, Azhar Maqbool, a Pakistani picnicking with his family at the Red Sea city, explains that power bills would be showing as high as a 260pc increase. “The SR50 electricity bill will jump to SR180 next month,” he expects.
Hundreds of Pakistanis have been living in Jeddah for many years. Having been in Saudi Arabia for the past two or three decades, many Pakistanis say they own nothing back home except the green passport. “We burned our boats and have led a complete family life in Jeddah, but the new situation has placed us between the devil and deep blue sea,” laments Salman, a dentist who is also in the import and export business. He says that expats such as him living in Jeddah for decades have no privileges over those coming to Saudi Arabia just recently. Stating that the Saudi government has recently made it mandatory to get health insurance at the time of the iqama renewal, he adds that the insurance cost is now ranging between SR2,000 and SR6,000 — again, a back-breaking preposition for expats.
Various businesses in Jeddah are letting go of Pakistanis and other expats to meet the 50pc ‘Saudisation’ requirement, says one gentleman. “No local businessman is ready to pay the SR400 per month fee for any additional expat employee. Explaining the volume of Pakistanis’ flight back, he said that enrolment in the Pakistan International School, Jeddah, has decreased from 13,000 to 8,000 during the past year. “Those who could not foresee the economic crisis and continued their children’s education in Jeddah schools are bound to pay a heavy cost in terms of dependents’ annual fee besides all the other expenses in the wake of the five per cent VAT,” he elaborates.
Another Pakistani shares that expats took the risk of continuing routine life in Jeddah, expecting some kind of amnesty at the time of the implementation of the new tax regime as was the case on many occasions in previous years. However, the king is set to implement his policies in letter and spirit, he believes.
Explaining the Saudi government’s viewpoint in implementing the new tax regime, a Saudi national explains that the government is concerned about the country’s soaring unemployment rate (which rose to 12.7pc in the first quarter of current fiscal year) and plans to plug it. To begin with, he says, the Saudi government wants that expats be compelled to leave so that Saudi nationals can take over jobs — Saudi women, too, will be allowed to come out on the roads from June 1 this year.
Since Saudis will not be hit by the new tax regime and inflation as the surplus cost is being packaged back to them in their national system, opines this national, for Pakistanis it would be a matter of the survival of the fittest.
Published in Dawn, January 9th, 2018