The government should look into increasing salaries if VAT, which takes effect in less than two weeks, heavily impacts the consumers’ pockets, the Federal National Council (FNC) was told on Tuesday.
During the FNC session held in its headquarters, FNC member from Sharjah, Dr Saeed Al Mutawa raised concerns over the impact VAT will have on consumers, the readiness of businesses, and VAT’s impact on the overall national economy, with Obaid Humaid Al Tayer, Minister of State for Financial Affairs.
“Although VAT might appear minimal to consumers, it will be a burden once it is accumulated with water, electricity and gas bills,” said the member. However, the minister said there will be no salary increase, as it is not included in the 2018 federal budget.
“The draft law for 2018 federal budget, which the FNC will look into today, does not include any salary increases,” announced the minister.
He said the government already introduced increases to the basic salary in a regular manner.
“This increase could be higher than the impact percentage of VAT,” Al Tayer added.
Although the members argued that VAT could affect the consumers, the minister pointed out that the tax will not be implemented on health or school education.
However, Dr Al Mutawa said an official proposal should be raised to the government and presented to the Cabinet about how much Emiratis are spending after VAT takes effect and whether or not it will affect them.
The FNC member proposed that based on the evidence from the study, a salary increase should be given, in which members of the council voted in favour for.