IslamicFinance.de

In July, a group of 83 of the world’s richest people calling itself Millionaires for Humanity urged governments to increase taxes on them to help deal with the economic fallout from the COVID-19 pandemic. Their idea, the latest version of a wealth tax was received as almost revolutionary. Although wealth taxes may seem bold and innovative, however, the concept is almost as old as money itself. Since the ancient Greeks there have been wealth taxes in various countries right through to the present day. More recently than the ancient Greeks, a wealth tax has been foundational to Islamic practice. The zakat functions as a 2.5% wealth tax on liquid assets. Modern wealth taxes have often failed because they haven’t learned from their historical equivalents.

The collapse in oil prices, which have more than halved from their previous peaks, has not been painless for Saudi Arabia. However, it’s far too soon to start writing the kingdom’s obituary: Its economy is far better insulated now than it was during the slump of the 1980s and 1990s, when oil reached below $10 a barrel in 1998. Although spending increased in the oil boom years of the 2000s, Saudi Arabia saved quite a bit of money during this time. Cash reserves as a ratio of GDP reached close to 100 percent in 2014. Saudi Arabia will not incur a fiscal or currency crisis of any sorts for the next few years. Its balance sheet has recently made tremendous improvements.