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Ahmed Al Dhaheri In Class Policy Brief 2 Public Policy Challenges in the Middle East The Informal Sector in Qatar

Qatar is a constitutional monarchy where the head of state (the Emir) has the final say in everything and no political parties are allowed. Qatar is a Rentier state in which most of the revenue is derived from oil and natural gas revenues. Citizens and corporations are not required to pay taxes. Rules and regulations are mixed civil and sharia law. Civil rules are generally quite lenient as opposed to Sharia rules. Problem The problem at hand is the existing informal sector. The informal sector is the part of an economy that is not taxed or monitored or included in any national statistic. The informal sector in the country accounts for 60% of the total expat labor force according to the minister of labor. Since, 90% of our population is expat labor force; the informal sector poses to be a huge threat to our economy. However, the problem is not as bad as it seems because citizens and corporations are exempt from paying taxes. Thus, we are not losing out on possible tax revenue. The nature of employment in the informal sector is low skilled workers ranging from construction to taxi drivers. Also, domestic workers (mostly women) work part time in households as maids, cleaners, or cooks. There has been a rising issue where skilled laborers such teachers in private schools exploiting the tourist visa which allows them to stay for 1 month only. The teachers will never get a working visa, but instead travel to the borders of Saudi Arabia and come back every month to renew their tourist visa. All of this excluded the criminal informal sector including prostitution, drugs, and alcohol. There are both benefits and losses generated from the informal sector. Some of the benefits are providing job opportunities to the urban poor, autonomous expenditures create multiplier effects on the equilibrium national income, and it helps smaller firms to sustain their businesses. Some of the losses are forgone revenue from working visas and sponsorship, which in turn reduce the availability of funds to improve infrastructure and other public goods and services. Recommendations The time frame for my recommendations is flexible and we can only benefit from them. We have nothing to lose on our plate and we must move forward now. Reduce the fees imposed on the least-educated expatriate employees for sponsorship transfer. Under the new system, less skilled employees have to pay a fee of 1500 riyals instead of 3000 riyals. Also, they must complete one year of service instead of three to have their sponsorship transferred. This will lower the burden on the laborers and make them less likely to resort to the informal sector for job opportunities. Regarding to criminal activity in the formal sector such as prostitution and drug dealing. Increase the penalty costs incurred by the offenders, raise the probability of catching them by raising their priority in the policy agenda, and finally display crimes that happen in the media and especially in national TV channels because media play a huge role in education the people and transmitting information.

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