Tuesday, May 29, 2007

Removing subsidies on food

Alwaqt news paper carried the following report:
The government is considering removing subsidies on food items namely, live Australian stock, Chicken and Flour. The government is thinking of replacing the current subsidies with one of the following programs:
1-giving food coupons to needy families (which will probably not be implemented due to the complex nature of the program and the failure of this program in other countries)
2-Giving living allowances of BD30 per family to needy families

Three ways are mentioned in the report to identify needy families:
- Households making less the 400BD per month
- Households making less then BD500 per month
- Households making less then BD1000 per month

Another fact worth mentioning is that the total cost of food subsidies is BD11 million per year from total cost of subsidies of BD500 million per year, which makes food subsidies only 2.2% of total subsidies.

Now, referring to yesterdays news papers, Bahrain announce a surplus budget of more then BD100 million. We all know how high the prices of oil have gone in the last few years and we also feel the economic growth our country is experiencing (although as citizens we are yet to benefit from it).

Why would the government wants to change the food subsidies program?? What is it going to gain from it? It only represents 2.2% of total subsidies and we are experiencing a surplus budget, we are not in desperate need of cutting expenses, even if we did, don’t you think the amount we are looking at is insignificant to other things we can cut down on.

My second point, why is the middle class the first to suffer from the changes in policies and cutting expenses? (by the way I don’t think a household that makes BD1000 a month is in the middle class, maybe lower middle class).
Let me put this in prospective, The Housing Ministry announces that house holds making more then BD1000 a month will NOT get ANYTHING from the Housing Ministry (no flats, no loans, no residential units, NOTHING AT ALL), effectively saying to the middle class “ you are on your own”. Consider this, a decent house will cost around BD100,000 to 120,000, a rough calculation on a flat rate of 5% over 20 years, will result in an installment of BD1,000 (yes one thousand BD) a month for 20 years!!
Now, the government wants to cut the food subsidies on the middle class for no valid reason. Consider the current inflation in food prices, now the government will remove the subsidy on food, we all know what to expect, Higher Prices. What do we get for it?? Lower income families get BD30, and the rest get nothing.
In any economy, the most important class of citizens is the middle class. Every country in the world wants all its citizens to move to middle class. Except, of course our country, which is pushing them to the lower classes.

If this policy is implemented, expect more attacks on the middle class.


Free Spirited said...

Shut Up Government!!

Leo: The King said...

The country could make more and more surplus with just imposing some small % of taxed on those banks who is the most to benefit from this tiny island.

A bank is the operated by a very small number of people, will benefit this group which is not a representative sample in what so ever way of the people of this kingdom. Banks should take on some kind of social responsibility to develop our torn societies that the government is not saving an effort in tearing it more and more inside out.

If the government impose an income tax of 5% (a tax rate that will never be found around the globe) on 20 banks whos average profit is around BD 20,000,000. The government will be getting BD 20,000,000 per year which is more that the current subsidy. They spend little bit more and make life little bit easier on us and the remaining BD 5 million 7alal 3alaihom..


Shahrayar said...

Why Food, just cut the Defences & Security Budget by % 1 …this way you’ll be saving Millions

Free Spirited said...

:) nice one shahrayar

Ala said...

they're not going to remove the subsidy. It was just a proposition but it will not happen.

SILVER said...

You are right Ala, i guess they read my blog :P


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