The white tax on undeveloped land in Saudi Arabia has been implemented.

According to a recent post by ARGAM “http://www.argaam.com/en/article/articledetail/id/477846“, the white tax on undeveloped land has been implemented.

I am in full support of this policy, since the government is trying to incentivize owners of land to develop their lands in order to reduce the shortage in the housing market that is propping up house prices. Which also safeguards fair competition and it combats
monopolistic practices in the housing market (since paying a 2.5% tax on property that does not generate cash flow seems to be a like a drain on a landowner’s account balance).

There has been substantial amount of literature and research on the issue of land inequality, such that a small percent of people own a large percent amount of land. This inequality should not be taken lightly. Many publications in top economic journals have discussed the implications on society and the economy when high levels of land inequality exists. Some findings even suggest that land inequality by itself promotes stagnation in economies that seek to develop into industrialized ones.

The ideal situation would be that house prices decline, then the incentive of owning a piece of land falls and that in turn, causes people with wealth to dwell into other businesses that can generate fair returns and economic activity.

At a time where Saudi is facing rapid structural changes, those who have exploited the less fortunate finally must pay up.

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