OMAN'S -INCOME TAX- OMENS : STUDENTS GLOBAL ESSAY

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Oman's income tax - first in the region - signals changing reality. Other Persian Gulf nations are watching the move as they look at a future beyond oil.

The concept of an income tax has long created debate and anxiety among the citizens of the fossil fuel-rich countries in the Persian Gulf. 

But no nation had actually introduced one until last month, when Oman announced that it would apply a 5% tax starting from 2028 on those who make more than 42,000 Omani riyals, or around $109,000.

Officials said that the new tax was intended to promote social equity and reduce the country's  dependence on oil and gas, which made up around 70 percent of the state revenues last year.

But Oman could also become a testing ground in the region, where the royal families that have ruled for decades have used their resource wealth to subsidize citizens' lives while granting them minimal political participation.

The previous model state income and benefits  has come under pressure over the past decade.

Oil revenues have fluctuated in several gulf countries, and their governments have also spent more. They are looking for ways to diversify their economies beyond fossil fuels.

Ahmed Kashoub, an Omani economist, said the TAX was necessary to diversify the state's revenue streams, and he acknowledged that  short-term challenges were inevitable.

'' But over time the law can support better  public services and more balanced economic development - provided the government ensures transparency about how tax revenues are allocated,'' he said.

The tax would mainly affect high earning foreign residents, potentially pushing them to leave, said Karen E. Young, a political economist focused on the Gulf at Columbia University's Center for Global Energy Policy.

'' At first glance, the income tax appeared to be a positive step - if its goal is to fund and improve public services, and it excludes low-income groups,'' said Samia Murad, 31, an Omani woman who runs a nonprofit group.

'' But the real concern is whether it might be misused, becoming an added burden on citizens or a factor that discourages investment in Oman.

The policy could lead to a recalibration of the relationship between citizens and their government, Dr. Young said.

Once the government begins to collect revenues from its citizens, some may start to ask more serious questions about how their leaders are spreading the money, wanting to hold them accountable.

The decision is a signal to the population that as the country prepares for a future beyond oil, '' you as a citizen and a resident have a responsibility for the changes that need to take place,'' she said.

The World Students Society thanks Turki Al-Balushi and Vivian Nereim.