In the United States 94 percent of all government revenue comes from either direct or indirect taxation on citizens or businesses. The government then, is reliant on the people for survival. Their productivity is what allows the government to function.
Because of the this, democracies like the U.S grant great power to their citizenry. In the United States the Congress is the organ of government that allows citizens a voice in controlling the way the government spends their taxes. Spending bills can only originate in the lower house, traditionally elected directly by the people. If the people’s representatives do not allocate the funding, then no law or program can be funded or enforced.*
Other Aspects of the American system
Because of it’s representative nature the American system it is also very flexible and stable. Taxes can be raised and lowered by the Congress with the signature of the president or an 2/3rd’s majority of the congress. Should a fiscal crisis erupt, marginal income taxes can be adjusted without risking the stability of the government. In World War Two for example, the highest marginal tax rate reached 94 percent. Even with such high taxes the Democratic Party stayed in power until 1952; over seven years after the war ended.
Legislatures around the world share a similar function. They not only make laws but control spending and allow the government to borrow money with the consent of the governed. This system separates the of powers of a government and prevents one organ from dominating the others.
The Saudi System
Unlike the western system, which focuses on private individuals and corporate productivity to create revenue, the Saudi Kingdom relies on state owned petroleum companies to produce it’s revenue and support the state. In Saudi Arabia, oil money accounts for roughly 80 percent of total government revenue. The tax code is simple and heavily geared toward extracting money from petroleum profits.
The difference between the U.S and Saudi Arabia is night and day. A government owned petroleum company called Saudi Aramco owns all of Saudi oil production and therefore produces most of the government’s income. Because the Saudi royal family controls the government, they control the oil money. Power is therefore centralized in the royal family, both economically and politically.
Why Saudi Arabia doesn’t need a legislature
In essence a legislature is a means of consulting the population regarding law and finance. In Saudi Arabia this mechanism is not needed. Because of it’s vast oil wealth the House of Saud doesn’t need the consent of the people to raise money.
This revenue is then fed back into the government to pay for expenses and policies. This loop essentially cuts the populace out of the process. There is no need to consult the people or create representative institutions because the Saudi people are not central to the survival of the government or necessary to achieve it’s political goals.
As long as the oil revenue keeps flowing the Saudi regime will remain intact. The government can exchange economic security and the occasional subsidy for the freedom of it’s citizens and continue to dominate all aspects of Saudi society with it’s immense centralized economic and political power.
The downfalls of this system are obvious. The system is not representative or stable. All of this centralized wealth means that Saudi Arabia is totally reliant on oil to support it’s society. Many goods and services like gasoline are heavily subsidized by the government and people have come to expect this. In recent years the population was even bribed into submission with a “gift” of billions of dollars so they would not to revolt during the Arab Spring.
Saudi Arabia is also resistant to reform because of it’s lack of representative structures. Only the King can actually make laws. Should oil prices crash or the oil dry up there wouldn’t be enough revenue to keep the kingdom running and no way to truly reform the system without revolution. Given the fact that oil is a finite resource, the downfall of the Saudi state is inevitable.
But that is a topic for another article.
* Senators used to be indirectly elected by state governments. This rule is a holdover from that era.
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