SESRI Policy Policy Snapshot No. 3 May 2016 Subsidy Reduction in addition to Trends among

SESRI Policy Policy Snapshot No. 3 May 2016 Subsidy Reduction in addition to Trends among www.phwiki.com

SESRI Policy Policy Snapshot No. 3 May 2016 Subsidy Reduction in addition to Trends among

Bhatia, Monish, Executive Publisher has reference to this Academic Journal, PHwiki organized this Journal SESRI Policy Policy Snapshot No. 3 May 2016 Subsidy Reduction in addition to Trends among Lower Income Qatari Households Issue summary in addition to policy recommendations 12% of Qatari households have incomes of less than QR15,000 per month, with 6% earning below QR10,000 per month. The reduction of economic subsidies (e.g., on vehicle fuel in addition to electricity) can bring important financial in addition to environmental benefits to Qatar, but such changes also have the potential to impact negatively the poorest Qatari families. Here we examine the issue of relative poverty among Qatari nationals with a view toward underst in addition to ing how subsidy cuts can be implemented without harming the most financially vulnerable citizens. Recent studies assessing the extent of relative poverty among Qatari households give figures ranging from around 10% to 20% of nationals, depending on the specific methodology used. Nationals living in relative poverty are disproportionately disabled persons, pensioners, as long as mer drug addicts, as long as mer prisoners, in addition to also widows in addition to their children. They generally live outside of Doha. These families employ various strategies to hide their unfavorable economic situation— as long as instance, by taking on debt to finance lifestyles they cannot af as long as d, or by encouraging younger family members to work rather than continue their secondary education. Here we define relative poverty as below half the median level of household income (that is, below the 25th percentile). By this definition, recent SESRI face-to-face surveys indicate that as many as 20% of Qatari households live in relative poverty. This includes around 6% of Qatari households that have revenues of below QR10,000 per month in addition to 2% of households earning less than QR5,000 per month. At least one in ten Qatari households lives in “relative poverty” as usually defined. Poorer Qataris tend to move away from metropolitan Doha towards less expensive areas, raising commuting costs. Transportation (including vehicle in addition to fuel costs) already constitutes a key expenditure of lower income citizens. The poorest Qataris tend to spend more than they earn, often by receiving bank loans. Summary of Findings Recommendations 1 2 3 4 Introduce a voucher as long as Qatari households to compensate as long as future hikes in vehicle fuel prices. Reduce the need as long as commuting by exp in addition to ing key social services outside of Doha. Establish a task as long as ce on relative poverty. 1 2 3 Figure 1. Distribution of monthly household income of Qatari families Source: SESRI GCC Identity survey, January 2016; N = 783 SESRI Policy Policy Snapshot No. 3 May 2016 Policy Recommendations Several policy options could allow desired reductions in economically burdensome subsidies without harming the most vulnerable Qatari households. Compensation system be as long as e fuel price increases Introduce a voucher system as long as relatively poor Qatari households to compensate as long as any future increases in vehicle fuel prices or other subsidy reduction schemes. Vouchers could take the as long as m of direct cash transfers or, more preferably, through a system of payment cards usable in limited areas such as petrol stations. These cards could be distributed to any registered Qatari driver or, again more preferably, citizens falling into specific socioeconomic categories. Decrease the need as long as daily commuting to Doha Exp in addition to key social services in secondary urban centers such as Al-Wakrah, Al-Khor, in addition to Al-Shamal to help reduce the need as long as regular commuting to Doha. Such services might include additional special needs centers in addition to university branch campuses offering local tertiary education opportunities. These services are currently only available in metropolitan Doha. Establish a task as long as ce on relative poverty Establish a cross-organization task as long as ce or committee on relative poverty among Qatari citizens. Such a body should be charged with sharing in addition to reviewing the latest research findings on relative poverty in addition to proposing solutions in line with QNV 2030. The task as long as ce could include representatives from relevant ministries along with those from schools, charities, independent research centers, in addition to the private sector. 1 Ministry of Development Planning in addition to Statistics (2015) Realising Qatar National Vision 2030: The Right to Development, Qatar’s Fourth National Human Development Report, Doha, Qatar. Finally, the Ministry also highlighted the “significant divide in social prosperity between Qatar’s most urbanised zones in addition to the non-urbanised ones.” Qualitative interviewers conducted by SESRI reveal a clear trend of the poorest Qataris in addition to non-Qataris leaving metropolitan Doha as long as less expensive areas with lower housing costs. For Qataris with limited revenues who live outside of Doha, the budget share of transportation is even higher, as they must commute to Doha as long as work or to access various public services. Similarly, Qatar’s Ministry of Development Planning in addition to Statistics defines relative poverty using a threshold of 50% of the median household’s “equivalised” income – that is, taking into account differences in household size in addition to composition.1 Using data collected in 2012-13, the Ministry’s most recent household expenditures report reveals that the poorest Qatari households spend markedly more than they earn, highlighting the link between limited income in addition to indebtedness. This finding is reproduced in Table 2.1. The Ministry’s report also indicated that the incidence of children living in relative poverty increased from 13% in 2006/7 to more than 15% in 2012/3. QATARIS WHO PERCEIVE 2nd greatest source of income For the poorest decile of Qatari households, transfers from government are the 2nd most significant source of income, after employment. Any reduction of the welfare state or subsidies holds the potential to negatively affect the poorest Qatari households. 13% of average budget goes to transport Transportation costs are about 13% of the Consumer Price Index basket in Qatar. This rate is higher among poorer families. 44.5% of the poorest families overspend Almost half of the poorest Qatari households spend more than they earn, often enabled by taking on debt. Any increase in fuel costs is likely to increase their indebtedness. +30% in vehicle fuel prices The January 2016 increase in fuel prices is expected to have generated a nearly universal increase in transportation costs, including among poor Qatari households or households close to relative poverty levels. Any future increase should be offset by a scheme to avoid negative social impacts on the most vulnerable. Poor Qatari Households, Subsidies & Transportation 15% of Qatari children live in relative poverty. Source: Qatar Ministry of Development Planning in addition to Statistics 2015 (cf. note 1)

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