UAE and Kuwait have such a low tax revenue as percentage of GDP

[jackson6612]

Why do countries like UAE and Kuwait have such a low tax revenue as percentage of GDP or tax to GDP ratio (don't know if these two are the same things or not)? I'm a total layman in these things, so please keep your reply straight and explanatory. Thanks a lot.


http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP

 

[russ_watters]

They have (and sell) oil. See: Alaska.

 

[lisab]

They have (and sell) oil. See: Alaska.

And their populations are fairly small, perhaps the governments doesn't need much money to serve their citizens.

 

[jackson6612]

Russ: Do you mean they don't need public money and that's why their direct and indirect taxation is too low?

 

[russ_watters]

Yes.

 

[jackson6612]

Thanks for the clarification. That would mean that one has more chance of making money in UAE than in Denmark where taxation is markedly high, though there are other factors to be taken into consideration (but I don't exactly know what those other factors are). Am I right?

 

[russ_watters]

No, not really - you're oversimplifying. How much take-home pay you make has a whole lot more to do with you than it does with what government you are under (usually). And those countries are so vastly different that the ways you would go about making money could be vastly different.

 

[Office_Shredder]

The average taxation rate amongst Amazonian natives is approximately 0% of income, yet you would be ill-advised to move in with a native tribe to get in on the sweet deal.

Another more realistic example: many companies in America feel they have trouble competing against European and Canadian companies, because the extra taxes that are paid in those countries to cover healthcare costs is smaller than the private cost that companies pay to cover their employees in America.

Using taxation rate as a way of measuring where you can make the most money is generally a bad strategy

 

[jackson6612]

Thanks a lot, everyone, esecially Office Shredder for the latest post.

Those natives have very low GDP and Per capita income. Those Americans companies in a way feel jealous because other companies located outside the US are, perhaps, making more money using less investment etc. Please guide me.

GDP is a good economic indicator to identify how rich a country or country's government is as a whole. But I have observed Per capita income is a very misleading economic indicator to know how much an average national earns. In the case of a country like India where most of the people are poor and most of the wealth is accumulated only among a small group of people Per capita doesn't help. What other economic indicator could replace Per capita in such cases to reflect real picture? Please help.

Thanks a lot.

 

[russ_watters]

Median income?

It all depends on what you are looking to measure.

 

[Ygggdrasil]

Russ: Do you mean they don't need public money and that's why their direct and indirect taxation is too low?

If Alaska does not require public money, why does Alaska get $131.82 per capita in earmarked federal appropriations where the national average is $27.36? (source: http://www.cagw.org/reports/pig-book/2010/rankings.html ). Note this is not as bad as in recent history; in 2005, Alaska received $984.85 per capita versus a national average of $33.03 per capita!

Sure some federal spending likely scales more with the physical size of the state than the population of the state (e.g. maintenance of roads), but at times Alaska has received obscene amounts of money for questionable projects (e.g. the infamous "bridge to nowhere"). One wonders if Alaska requires this amount of federal support because their state taxes are among the nation's lowest.

 

[WhoWee]

If Alaska does not require public money, why does Alaska get $131.82 per capita in earmarked federal appropriations where the national average is $27.36? (source: http://www.cagw.org/reports/pig-book/2010/rankings.html ). Note this is not as bad as in recent history; in 2005, Alaska received $984.85 per capita versus a national average of $33.03 per capita!

Sure some federal spending likely scales more with the physical size of the state than the population of the state (e.g. maintenance of roads), but at times Alaska has received obscene amounts of money for questionable projects (e.g. the infamous "bridge to nowhere"). One wonders if Alaska requires this amount of federal support because their state taxes are among the nation's lowest.

If Alaska upsets you, don't take a look at 2nd place - Hawaii received $326,099,850 compared to Alaska's $92,072,850 - the difference is population.

Alaska has a population of 698,473 and Hawaii has 1,295,178.

Overall, Alaska is on par with IN, TN, AZ, and OK in the "2009 Pork" category. Also, a closer look at population would have indicated that Alaska is on par with D.C., Vermont, Delaware, and Wyoming.

 

[jackson6612]

Are you talking about the funding provided by the Federal Government to each state? I don't know how the US system works. If I'm right, then Hawaii's share, $326,099,850, out of the Federal budget isn't that much. Is it?

I believe one of the reasons they have low tax rates in Alaska is that they want people to settle, start business there. Alaska has a low population density as compared to most other states. Am I correct?

 

[talk2glenn]

I believe one of the reasons they have low tax rates in Alaska is that they want people to settle, start business there. Alaska has a low population density as compared to most other states. Am I correct?

No. You're allowing these other posts to distract you. Russ had it correct; the low tax rates in Alaska and the Emirates are due to revenues from mineral sales and royalties. Government's share of GDP is more or less comparable in Alaska to the other states and in the U.A.E. to other countries. The difference between tax revenue and net revenue is oil and gas profits.

Take a look at this link; Alaska actually pays its citizens a share of its oil revenues, but as a consequence it is one of the most difficult states in which to establish residency, and I'd imagine its much the same in the U.A.E. :

https://www.pfd.state.ak.us/

 

[loseyourname]

Kuwait and the UAE have nationalized oil industries. No government in the world taxes itself. There's no reason to. All of the oil revenue already is public money. By the same token, for a while Rome managed not to tax its citizens in Italy at all because the public treasury made so much money off of state-owned gold mines in plundered territories it had conquered.

 

[jackson6612]

The average taxation rate amongst Amazonian natives is approximately 0% of income, yet you would be ill-advised to move in with a native tribe to get in on the sweet deal.

Another more realistic example: many companies in America feel they have trouble competing against European and Canadian companies, because the extra taxes that are paid in those countries to cover healthcare costs is smaller than the private cost that companies pay to cover their employees in America.

Those natives have very low GDP and Per capita income. Those Americans companies in a way feel jealous because other companies located outside the US are, perhaps, making more money using less investment etc. Please guide me.