Saudi Arabia Isn’t Just Raising Taxes

Iconic images from the 1970s show long lines at gas stations across the United States—a group of Arab nations had imposed an oil embargo on the U.S. for supporting Israel during the 1973 Arab-Israeli War. The price of oil nearly quadrupled, causing gas shortages that hit Americans badly, while leaving countries such as Saudi Arabia so rich that they dismantled their tax bureaucracies. In the following decades, Saudi citizens paid virtually no taxes.

That is until two years ago, when Riyadh—along with other neighboring oil autocracies—imposed a new value-added tax of 5 percent on most goods and services. No one really likes paying taxes, let alone people who have never paid them, and many of those countries’ citizens that it imposed an unnecessary financial burden. But