Thread regarding Saudi Aramco layoffs

Good thing Saudis can't do math. 35% reduction in tax of Aramco is to be replaced by 7%? Dividend. Gov't says the dividend will be equal....,. Huh.

KSA is very much aware of the fact that domestic electricity and fuel consumption is excessive and must come down. They know they cannot continue to burn through their oil for their own use, rather than selling it on the market. Using it rather than selling it? Just very poor use of the commodity they've been blessed with. This is why they recently reduced subsidies on gasoline and electricity and allowed prices to rise. There are other changes coming, as well as further increases to home electricity and gas prices, which will be allowed to rise in the future. The VAT tax will be introduced in 2018, but this will be done across the GCC, so not a huge deal since everyone will have to pay it. In terms of KSA, the reduction of subsidies is earth-shattering change, when just a few years ago, this type of change would be unheard of.

I think some of their ideas for improving revenue generation are good, but putting too much of the financial burden on expats will likely backfire and hurt them more than help them. Taxing the salaries of only expatriates is just ridiculous, and NOT taxing Saudis will cause resentment of expats. Expats would be expected to bail the country out of it's own financial mess, while their own citizens only pay higher gas prices and VAT? If other GCC countries do NOT impose an income tax, expats will simply relocate elsewhere in the Gulf where there are no plans for income taxes, particularly if just assessed on expats. IF KSA is the only country to introduce an income tax, why would expats stay when relocating a few miles away would save them thousands? Not to mention the huge increase in visa fees that was not reciprocated by other GCC states. When saudi goes these major changes alone, they put themselves at a competitive disadvantage with other Gulf countries ready and willing to match their salaries.

Saudi leadership has to see that as long as their citizens have to make relatively few sacrifices financially (high gasoline and VAT), while the expatriates are forced to bear the brunt of the financial burden for their own money problems, their own citizens will have no ownership in the problem, nor will they have any reason to feel like they need to be a part of the solution. To them, it'll continue to be someone else's problem. Something they can just continue to ignore.

I believe that things are worse than they appear. I do not nelieve that the recoverable reaerves in Saudi Arabia are what they report or are what they plan to value the company at (they are developing their last major field, rig counts have skyrocketed but production seems to be limited to <12 mbd, and exports are falling due to accelerating domestic consumption)

I think that within 2 years they are going to fall fast and fall hard and the best place to be when they do is somewhere else.