Assessments

Border Taxes imposed throughout the Middle East


Sunday، September 04، 2016
Border Taxes imposed throughout the Middle East

Several countries in the Middle East have moved to impose or suspend cross-border taxes on goods and people, referred to either as a “border tax” or “exit tax.” These taxes have been imposed or suspended not only to legalize procedures for crossing state borders, but also due to a variety of considerations, including mobility between regions within the same country, securing additional financial resources for terrorist organizations, alleviating the severity of economic crises, jumpstarting tourism movement, helping develop infrastructure, imposing the same taxes as immediate neighbors, privatizing sectarian trends, and taking punitive measures against international forces.

A Variety of Measures

Many steps have been taken by principal actors regarding border taxes in recent years. This was manifested in Tunisia and Algeria, Syria and Lebanon, Jordan and Syria, Iraq and Jordan, the Emirates and the Sultanate of Oman, and Pakistan and Afghanistan. All of these countries were mainly linked by the repercussions of revolutionary activity and the exacerbation of domestic armed conflicts in chronic hotbeds of conflict across the Arab world. This created the internal and regional context which accompanied the imposition of border taxes. These taxes are distinct from those that existed previously, a point that is made clear through the following:

Catalysts for Transit:

1. Legalization of movement between “tense” domestic areas as indicated by the situation in Syria after 2011; truck drivers traveled between areas under the control of a variety of major actors across Syria such as the Assad regime, the armed opposition, Kurds, and ISIS. In light of the multiplicity of parties in control, drivers were forced to pay a bribe of around $250 in areas under Assad’s control and a symbolic customs tariff in areas under Kurdish opposition control. In ISIS territory, taxes were imposed on trucks carrying goods and commodities, and these expenses were borne by traders on both sides of the border. An annual Zakat fee was also collected from the drivers.

2. Securing additional sources of financing for terrorist organizations. One of the primary sources of funding for ISIS in their key areas of influence on the Syrian-Iraqi border involves taking a fee from drivers crossing the areas under their control amounting to $300-$1000 according to prevailing estimations. After paying the amount due, drivers are given a form stamped with the organization’s logo, and the same can be found on the Jordanian-Iraqi border. Drivers are forced to get rid of the stamp so that it is not discovered by Iraqi officers and soldiers who run checkpoints near Baghdad.

ISIS has adopted this taxation system to combat declines in fighters’ salaries due to air strikes conducted by the international coalition. These strikes have impeded oil smuggling operations and targeted checkpoints created by the organization on the border between Syria and Iraq.

Reviving Tourism:

1. Alleviating the severity of economic crises. This was made clear by the decision made by the Tunisian government to impose a tax of approximately $15 on cars leaving Tunisia. This has helped soften the repercussions of the economic crisis in the country and increase revenues. Tourism is the backbone of the Tunisian economy but is suffering in the aftermath of the “Jasmine Revolution,” the political transition crisis, and threats of trans-border terrorism. This has led to a decline in European tourism, and particularly tourism originating from Spain, France, and Italy, despite the measures taken by the Tunisian government aimed at supporting tourism. These include restructuring the debts owed by tourism institutions, granting them new loans, and providing a financial grant for workers considered “technically unemployed” at their institutions.

2. Jumpstarting tourism. Some governments were forced to exempt certain nationalities from border taxes. This was applied after the Tunisian government reviewed its 2014 Finance Act through which the government aimed to impose the previously mentioned tax in order to revive the Tunisian tourism sector.

According to statistics published by the Tunisian Public Security Directorate for the year 2016, the border police recorded an increase in the number of Algerian travelers visiting Tunisia since the beginning of August 2016 compared to the same period the previous year. The number of tourists increased from 10,000 per day to 17,000 just for those crossing the border, reflecting increasing demand for Tunisian tourism among Algerians. This demand was partially expanded due to the failure of local tourism programs and the high costs of spending a few days in an Algerian coastal city compared to the tourism facilities and low prices available in Tunisia. Algerian tourists represent the largest share of tourists visiting Tunisia on a yearly basis with over five million Algerian visitors coming to the country annually according to some estimates.

3. Developing infrastructure. Some governments in the countries of the region use the returns of these taxes to develop road networks. This is exactly what Eng. Ahmed Al-Dheeb, Undersecretary of the Ministry of Commerce and Industry of the Sultanate of Oman, noted on 15 December 2013. He stated that the purpose of the fees imposed on trucks which cross the border was to provide the resources required by the government to repair roads in Oman. The Omani government decided to collect fees from trucks carrying quarry products which cross Oman’s land border. These fees amount to 40 OMR per truck and are collected at the border, in a manner very similar to the Emirati government’s decision three years ago to impose a tax on land transport companies valuing 100 AED for passenger buses plus 5 AED for each passenger and 100 AED for goods convoys plus 10 AED per ton.

In this context, the Tunisian Minister of Interior Mohamed Al-Nagem Al-Ghasely made an agreement with his Algerian counterpart Al-Tayeb Belaiz during a visit to Tunisia on 9 February 2016 to form joint committees in border areas between the two countries charged with setting out a joint strategy to push development in those areas on the one hand and fight terrorist organizations on the other.

The Privatization of Sectarianism:

1. Economies of sectarianism. Sectarianism appears to have gradually transformed into one of the economic determinants which guide domestic Arab armed conflict. ISIS is not the only risk faced by those crossing the border between Syria and Iraq, Jordan and Syria, or Lebanon and Syria: another can be found in the Shiite militias which have targeted mainly Sunni drivers. For example, one truck driver in Idlib (a Sunni area in Syria) was treated in a sectarian manner, having been stopped at several barriers and checkpoints by Alawite officers while Shiite militias controlled other checkpoints closer to Lebanon. These authorities imposed greater fees on this particular driver because he was of a different sectarian and political background.

2. Punitive measures against international forces. This was evident when Pakistan halted the passage of supplies and fuel tankers belonging to NATO in December 2011 in protest of the US air strike which killed 24 Pakistani troops at a checkpoint near the Afghan border. Pakistan issued statements which said that Islamabad was considering collecting taxes on fuel and supplies for NATO forces in addition to tolls and fees for storage.

On 4 July 2012, Pakistan’s Cabinet decided to reopen the border crossings following a seven-month closure to allow NATO forces operating in Afghanistan to pass through their territory after Washington apologized. They raised the fees collected from crossing trucks.

Counterproductive

Although there are gains associated with border crossings among the countries of the Middle East, there are negative impacts as well. This may include protest movements orchestrated by tourists, which was the case for Algerian tourists crossing the border with Tunisia. A number of border posts in the Tebessa province were closed, most recently in Heddada and Batita. Protests could potentially be organized by residents of the border areas, which is what took place for residents of Tunisia and Libya and resulted in an alliance between terrorist groups and smuggling games (called the “Islamist Gangs”). According to many reports, Tunisian smugglers pay armed Libyans to accompany them while illegally entering Tunisian territory. ISIS taking control of the border city of Ben Guerdane and attempting to establish an Islamic Emirate on 7 March 2016 may the best representation of how serious this threat really is.

Imposing border taxes may lead to a decline in tourist traffic. This was apparent following the calls made on social media websites to boycott the state because it imposes a border tax. Tunisia’s imposition of taxes recently led Algerian buses to launch a Facebook campaign aimed at boycotting travel to Tunisia. This also led to a heightened state of tension in bilateral relations after the Algerian Foreign Ministry summoned the Charge d’affaires at the Tunisian Embassy Shokry Latif on 19 August 2016. The Tunisian government suspended the border tax collected upon entering Tunisian territory for the countries of the Maghreb as per the treaty which established the Arab Maghreb ratified in 1989. However, the tax is still applied for citizens of other nationalities.

Overall, the state and violent, armed, non-state actors have resorted to implementing or suspending border taxes in order to fulfill their interests, which are entangled with economic considerations, demographic interventions, political dimensions, and security risks due to the serious threats posed to border security in the Middle East.

Keywords: middle eastEconomyMENABorder TaxesExit Tax