Taxation and Tax Policies in the Middle East. Butterworths Studies in International Political Economy

347 Pages·1982·4.924 MB·English

by  Hossein Askari, John Thomas Cummings, Michael Glover, Susan Strange and Ladd Hollist (Auth.)

Butterworths Studies in International Political Economy will present new
work, from a multinational stable of authors, on major issues, theoretical
and practical, in the international political economy.
General Editor
Susan Strange, Professor of International Relations, London School of
Economics and Political Science, England
Consulting Editors
Ladd Hollist, Director, Program for International Political Economy
Research, University of Southern California, USA
Karl Kaiser, Director, Research Institute of the German Society for Foreign
Affairs, Bonn, and Professor of Political Science, University of Cologne,
West Germany
William Leohr, Graduate School of International Studies, University of
Denver, USA
Joseph Nye, Professor of Government, Harvard University, USA
Published Titles
Economic Issues and Political Conflict: US - Latin American Relations
(Dominguez)
The East European Economies in the 1970s (Nove, Höhmann and
Seidenstecher)
France in the Troubled World Economy (Cohen and Gourevitch)
The Political Economy of New and Old Industrial Countries (Saunders)
Forthcoming Titles
War, Trade and Regime Formation
Japan and Western Europe: Conflict and Cooperation
Defence, Technology and International Integration
International Political Economy - A Text
Taxation and
Tax Policies in the
Middle East
Hossein Askari, BS, PhD
George Washington University
John Thomas Cummings, BS, PHD
US-Saudi Arabian Joint Commission
for Economic Cooperation
Michael Glover, BA, MA, MBA
US Department of State
Butterworth Scientific
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First published 1982
© Butterworth & Co (Publishers) Ltd 1982
British Library Cataloguing in Publication Data
Askari, Hossein
Taxation and tax policies in the Middle East.
(Butterworths studies in international
political economy)
I. Taxation-Near East
I. Title II. Cummings, John T.
III. Glover, Michael
336.2Ό0956 HJ2999.5
ISBN 0-408-10832-0
Photoset by Butterworths Litho Preparation Department
Printed in England by Whitstable Litho Ltd, Whitstable, Kent
Bound by the Dorsel Press Ltd, Harlow, Essex
ν
Acknowledgements
We wish to thank our families and particularly our wives for their support
and understanding during the preparation of this book.
Although, at different times during the writing of the book, the authors
were variously associated with the Ministry of Finance and National
Economy of the Kingdom of Saudi Arabia, the United States-Saudi Arabian
Joint Commission on Economic Cooperation, and the United States
Department of State and Department of Treasury, the opinions expressed
herein are entirely those of the authors. None of the statements or
conclusions contained in this book should be attributed in any fashion to
these official agencies.
xi
List of tables
Table
2.1 Selected developing countries: direct taxes (1966-1968) 10
2.2 Selected developed countries: direct taxes (1970) 11
2.3 Selected developing countries: individual income taxes
(1966-1968) 15
2.4 Selected developed countries: individual income taxes (1961) 18
2.5 Selected underdeveloped and developed countries: burden of
income taxes paid by married couple with three children in
relation to national per capita income (1957-1960) 19
2.6 Selected developing countries: poll and personal taxes
(1966-1968) 21
2.7 Selected developing countries : corporate income tax
(1966-1968) 23
2.8 Selected developed countries: corporate income tax (1961) 24
2.9 Selected developing countries: property taxes (1966-1968) 28
2.10 Selected developed countries: property taxes (1961) 29
2.11 Death duties as percentage of total taxes (1969) 33
2.12 Net wealth taxation as percentage of total national tax
revenue 34
3.1 Selected developing countries: ratio of export taxes to total
tax revenue (1966-1968) 38
3.2 Selected developing countries: ratio of import taxes to total
tax revenue(1966-1968) 42
3.3 Selected developing countries: ratios of excise taxes and sales
taxes to total tax revenue (1969-1971) 47
3.4 Value-added sales tax as a revenue source in developing
countries (1968) 53
4.1 Recent relative contributions of state enterprise profits to
Middle East government fiscal receipts 58
5.1 Recent official receipts from religiously-decreed taxes,
Middle Eastern countries 79
xii List of tables
6.1 Oil production: major Middle Eastern oil producers
(1915-1978) 88
6.2 Government receipts as a percentage of GNP and per capita;
GNP per capita, (1950-1977) 90
6.3 Direct and indirect taxes: Middle East countries (1950-1977) 92
6.4 Per capita tax load: Middle Eastern countries (1977) 94
6.5 Oil revenues relative to total revenues: major oil producers 94
7.1 Tax revenues: Bahrain (1950-1977) 97
7.2 Major taxes: Bahrain (1955-1977) 98
7.3 Tax revenues: Iran (1949/50-1977/78) 100
7.4 Major taxes: Iran (1949/50-1977/78) 102
7.5 Iranian overseas investments and returns (1960-1977) 104
7.6 Tax revenues: Iraq (1950/51-1977) 106
7.7 Oil receipts allocations to current and development budgets:
Iraq (1950/51-1977) 107
7.8 Major taxes: Iraq (1950/51-1977) 109
7.9 Iraqi overseas investments and returns (1960-1976) 111
7.10 Tax revenues: Kuwait (1950-1978/79) 114
7.11 Investment income: Kuwait (1952-1978/79) 116
7.12 Major taxes: Kuwait (1950-1978/79) 116
7.13 Tax revenues: Libya (1952/53-1977) 118
7.14 Major taxes: Libya (1952/53-1977) 119
7.15 Oil revenues relative to total revenues: Libya
(1961/62-1974/75) 121
7.16 Libyan overseas investments and returns (1960-1977) 122
7.17 Local government revenues : Libya 123
7.18 Tax revenues : Oman ( 1967-1978) 124
7.19 Oil revenues Oman (1967-1978) 125
7.20 Tax revenues: Qatar (1950-1978) 127
7.21 Major taxes: Qatar (1973-1978) 128
7.22 Qatari overseas investments and returns (1953-1977) 128
7.23 Tax revenues: Saudi Arabia (1947/48-1977/78) 130
7.24 Major taxes: Saudi Arabia (1947/48-1977/78) 132
7.25 Saudi Arabian overseas investments and returns (1960-1977) 133
7.26 Estimates of Emirate revenues, United Arab Emirates
(1960-1978) 135
7.27 Oil production in the United Arab Emirates 136
7.28 Tax revenues, Abu Dhabi (1967-1978) 137
7.29 Partial summary of revenues accruing to the government of
Dubai (1972-1978) 138
7.30 Sources of federal revenues: United Arab Emirates
(1972-1977) 139
7.31 External investment earnings and internal fiscal receipts:
United Arab Emirates (1972-1977) 139
List of tables xiii
8.1 Tax revenues: Egypt (1950/51-1977) 144
8.2 Major taxes: Egypt (1950/51-1977) 145
8.3 Current revenues available to local governments
(1962/63-1977) 147
8.4 Egyptian central and local government shares of property
taxes and service fees (1977) 148
8.5 Tax revenues : J ordan (1951/52-1978) 149
8.6 Foreign economic assistance to Jordan (1951/52-1978) 150
8.7 Major taxes: Jordan (1974 and 1978) 151
8.8 Tax revenues: Lebanon (1950-1975) 153
8.9 Major taxes: Lebanon (1952-1975) 154
8.10 Tax incidence in Lebanon (1968) 156
8.11 Anticipated and actual tax revenues during civil war period:
Lebanon 157
8.12 Anticipated tax revenues during the Lebanese civil war by
major category 158
8.13 Tax revenues: Sudan (1952/53-1977/78) 160
8.14 Major taxes: Sudan (1952/53-1977/78) 162
8.15 Major sources of revenue for local government: Sudan
(1957/58-1973/74) 162
8.16 Local government share of major revenue categories: Sudan 163
8.17 Tax revenues: Syria (1950/51-1977) 164
8.18 Major taxes: Syria (1950/51-1976) 165
8.19 Municipal fiscal revenues: Syria (1955-1976) 167
8.20 Tax revenues: Yemen Arab Republic (1966/67-1977/78) 169
8.21 Major taxes: Yemen Arab Republic (1966/67-1977/78) 170
8.22 Composition of zakat, Yemen Arab Republic
(1966/67-1977/78) 171
8.23 Tax revenues: People's Democratic Republic of Yemen
(1951/52-1978) 173
8.24 Tax revenues: Aden Colony and Protectorate 174
8.25 Major taxes: People's Democratic Republic of Yemen
(1951/52-1978) 175
9.1 Regression results : variations of Chelliah tax capacity model 185
9.2 Developing countries included in study 187
9.4 Regression results : revised tax capacity model with mineral
sector as independent variable 191
9.4 Regression results : revised tax capacity model with mineral
exports as independent variable 192
9.5 Comparison of regression results: Chelliah and revised
models 193
9.6 Mean values of regression variables, country sub-groups 195
XIV List of tables
10.1 Ratios of tax revenue to GNP (1950-1978) 202
10.2 Weighted average tax ratios (1950-1978) 202
10.3 Tax ratios: selected developing countries (1966-1968 and
1977) 204
10.4 Tax ratios: selected industrialized countries (1977) 206
10.5 Tax buoyancies: Middle Eastern countries (1950-1978) 207
10.6 Oil and non-oil tax buoyancies (1950-1978) 208
10.7 Ratios of oil revenues to total government receipts
(1950-1978) 209
10.8 Income distribution statistics: selected Middle Eastern
countries 210
10.9 Measures of income distribution: selected countries 211
10.10 Ratio of income taxes to total government revenues: Middle
Eastern countries compared to selected developing and
industrialized countries 215
10.11 Income taxes as a percentage of national income: Middle East
oil-exporting and selected industrialized countries 216
10.12 Percentage of population in urban areas: Middle Eastern and
selected developing countries (1960 and 1980) 217
10.13 Percentage of income tax receipts arising from business
profits 218
10.14 Estimated Muslim percentage of total population: Middle
Eastern countries 219
10.15 'Religiously appropriate' taxes as a percentage of total tax
receipts and of national income 220
10.16 Buoyancies of all taxes and 'religiously appropriate' taxes
(1950-1978) 221
10.17 Ratios of consumer taxes to total government revenues:
Middle Eastern countries compared to selected developing
and industrialized countries 223
10.18 Buoyancies of consumer taxes (1950-1978) 224
11.1 Bahrain: selected economic and fiscal statistics (1950-1978) 227
11.2 Gross domestic product by industrial origin : oil exporting
countries in the Middle East (1962-1978) 230
11.3 Iran: selected economic and fiscal statistics (1950-1978) 232
11.4 Average daily output: Iranian oil fields (1945-1980) 236
11.5 Iraq: selected economic and fiscal statistics (1950-1977) 238
11.6 Annual changes in official consumer price indices : Middle
East countries (1973-1978) 239
11.7 Average daily output : Iraqi oil fields ( 1945-1980) 241
11.8 Kuwait: selected economic and fiscal statistics (1950-1978) 242
11.9 Import duties as a percentage of total taxes : Middle Eastern
countries compared to selected developing and industrialized
countries 244
List of tables xv
11.10 Oil reserve lifetimes (reserves to output ratios): selected oil-
producing developing countries 245
11.11 Average daily output: Kuwaiti oil fields (1947-1980) 246
11.12 Libya: selected economic and fiscal statistics (1952-1977) 247
11.13 Oman: selected economic and fiscal statistics (1962-1978) 250
11.14 Qatar: selected economic and fiscal statistics (1950-1978) 252
11.15 Saudi Arabia : Selected economic and fiscal statistics
(1950-1977) 253
11.16 'Religiously appropriate' taxes as percentage of total tax
receipts : selected Islamic countries 255
11.17 Average daily output: Saudi Arabian oil fields (1946-1980) 257
11.18 United Arab Emirates : selected economic and fiscal statistics
(1964-1978) 258
11.19 United Arab Emirates: federal government revenues
(1973-1979) 259
11.20 Federal budget allocations to major functions (1973-1979) 260
11.21 Average daily output: United Arab Emirates oil fields
(1962-1980) 262
12.1 Egypt: selected economic and fiscal statistics (1950-1977) 267
12.2 Per capita domestically-generated tax revenues: Middle East
countries 268
12.3 Gross domestic product by industrial origin: non-oil
exporting countries in the Middle East (1962-1977) 269
12.4 Jordan: selected economic and fiscal statistics (1952-1978) 273
12.5 Selected measures of official development assistance: Middle
Eastern and other selected developing countries 274
12.6 Projected tax ratios: Jordan (1985 and 1990) 275
12.7 Lebanon: selected economic and fiscal statistics (1950-1978) 277
12.8 Lebanese exports (1953-1973) 278
12.9 Composition of exports: selected Middle East countries
(1973) 278
12.10 Sudan: selected economic and fiscal statistics (1955-1977) 281
12.11 Syria: oil production, exports and export earnings
(1968-1979) 284
12.12 Syria: selected economic and fiscal statistics (1950-1977) 285
12.13 Yemen Arab Republic: selected economic and fiscal statistics
(1962-1977) 290
12.14 Yemen People's Democratic Republic: selected economic
and fiscal statistics (1951-1978) 292
13.1 Oil tax and non-oil tax average annual growth rates
(1950-1977) 298
13.2 Officially-held overseas investments and returns (1960-1978) 299
xvi List of tables
13.3 Per citizen returns from state-owned overseas investments
(1960-1978) 301
13.4 Per citizen investment returns in major Middle Eastern oil
exporters and per capita GNP in selected industrialized and
developing countries (1978) 302
13.5 Projected per citizen returns from state-owned overseas
investments: 1985, 1990, and 1995 304
13.6 Future investment returns and current budget expenditures 306
13.7 Non-oil tax revenues and investment earnings (1973-1978) 308
13.8 Estimated petroleum and natural gas reserves and life of
reserves : Middle East countries 310
13.9 Estimates for petroleum production : 1978-2000 310
13.10 Estimates for domestic petroleum consumption : 1980-2000 311
13.11 Projected ratios of domestic consumption to production :
1980-2000 312
14.1 'Religiously appropriate' taxes as a percentage of total
revenues, Middle Eastern and other Muslim countries, by
per capita GHP 324
14.2 Remitted earnings from emigrant workers (1972-1979) 329
A. 1 Annual average exchange rates of Middle Eastern currencies
versus the US dollar 334
A.2 Islamic, Iranian and Gregorian calendar equivalents 336