The Impact of Value-Added Tax on the Healthy Lifestyle of Saudi Individuals

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 Abstract
This research aims to study the impact of VAT on the healthy lifestyle of Saudi
individuals. The research will focus on various objectives such as the cost of
healthy foods, consumption and availability of healthy foods, cost of gym
membership and fitness equipment, and participation in physical activities. The
study will further employ the cross-sectional design to collect data from a sample
of Saudi individuals. The research will further administer questionnaires and
surveys as a method of data collection. The study will be important in various
aspects of Saudi Arabia such as adding to the existing literature on the impact of
VAT on the healthy lifestyle of Saudi individuals. The study will also be of great
importance to policymakers to implement effective policies concerning the topic.
Keywords: VAT, healthy lifestyle
 CHAPTER ONE
INTRODUCTION
1.0 Introduction
Value Added Tax (VAT) is a consumption tax levied on goods and services at
points of sale. Saudi Arabia introduced a value-added tax in 2018 as part of its
efforts to diversify its economy and reduce its dependence on oil revenues
(Euromonitor International, 2016). VAT is currently levied at the rate of 15% on
most goods and services. The implementation of the VAT has raised concerns
about its impact on the cost of living, particularly its impact on the ability of
individuals to maintain a healthy lifestyle. This research proposal aims to
investigate the impact of value-added tax on the healthy lifestyle of Saudi
individuals.

1.1 Background of the Study

The introduction of VAT in countries within the Gulf Corporation Council such as
the United Arab Emirates, Saudi Arabia, Kuwait Bahrain Oman, and Qatar is an
aftermath of low prices of oil, thus forcing the government to find other means of
earning. VAT is implemented on various products such as alcoholic drinks,
packaged food, and non-alcoholic drinks. VAT usually has a policy of exemption
where there are provisions for certain products in the market.

Evidence from World Health Organization (2017) shows that a tax on sugary
drinks which raises the price by 20% leads to a reduction in consumption of the
product by the same percentage thus preventing obesity and diabetes which refer to
a healthy lifestyle. Revenue raises from the increment in taxes can also be
important in the promotion of the health of the population. Health can be improved
through spending the revenue collected on the improvement of healthcare systems,
encouraging healthier diets, increasing physical activities, and rebuilding capacity
for effective tax administration.

According to Fletcher et al., (2010) soft drink consumption is among the main
factors that lead to obesity in the United States of America. The government had to
come up with a way to reduce the consumption of the product. There was the
imposition of taxes on soft drinks using excise taxes, sales taxes, or special
exemptions to food. The introduction of the tax on soft drinks came with various
advantages such as a reduction in the consumption of the product, an increase in
the amount of revenue collected, and a massive improvement in public health (Al
Zarhani & Ahmad, 2019). Results of the research showed that the imposition of
taxes on soft drinks influences body mass index.

The healthy lifestyle of people in Saudi is highly articulated by various models.

The health belief model and theory of planned behavior try to explain ways in
which the impact of taxes affects the behavior of people in terms of a healthy
lifestyle (Al Jasser & Al Juhani, 2019). Tax imposition is not only used to restrain
the consumption of certain products, but it also provides an income that is
important to Saudis.

1.2 Statement of the Problem

The implementation of the VAT has raised concerns about its impact on the cost of
living, particularly its impact on the ability of individuals to maintain a healthy
lifestyle. This research proposal aims to investigate the potential impact of value-
added tax on the healthy lifestyle of Saudi individuals. Impacts on the healthy
lifestyle of Saudi people may include access to healthy food, healthcare services,
and other health-related products and services. The study will be helpful because it
will give more information on potential challenges that will be faced by individuals
in adopting a healthy lifestyle due to the implementation of value-added tax by the
government. Effective policies will also be implemented to aid in curbing the issue
of a healthy lifestyle in Saudi Arabia.

1.3 Objectives
1.3.1 General Objective
The general objective of this research is to study the impact of value-added tax on
the healthy lifestyle of Saudi individuals.
1.3.2 Specific Objectives
To analyze the impact of VAT on the cost of healthy food items in Saudi Arabia
To understand the effects of the implementation of VAT on the consumption of
healthy foodstuffs among Saudi individuals
To determine the effects of the implementation of VAT on the availability of
healthy food options in the Kingdom of Saudi individuals
To understand the impact of VAT on the cost of gym memberships and fitness
equipment in Saudi Arabia
To analyze the effects of the implementation of VAT on participation in physical
activities and exercise among Saudi Individuals.

1.4 Research Questions

1. What is the impact of VAT on the cost of healthy food items in Saudi Arabia?
2. How has the implementation of VAT affected the consumption of healthy
foodstuffs among Saudi individuals?
3. Has the implementation of VAT affected the availability of healthy food options
in the Kingdom of Saudi Arabia?
4. What is the impact of VAT on the cost of gym memberships and fitness
equipment in Saudi Arabia?
5. How did the implementation of VAT affect participation in physical activities
and exercise among Saudi individuals?

Significance of the Study

This study aims to provide valuable insights on the impact of VAT on the healthy
lifestyle of Saudi individuals. The results of this study will be helpful to
policymakers and stakeholders in the healthcare and nutrition industries in Saudi
Arabia. The research will also contribute to the existing literature on the impact of
VAT on consumer behavior and healthy living. The study will also have an
economic impact on Saudi Arabia. Businesses will be able to understand the
implications of VAT on the availability and affordability of healthy food options
and fitness services.

Scope of the Study

The study will be on the impacts of VAT on the healthy lifestyle of Saudi
individuals. The study will be conducted in Saudi Arabia. The study will be
conducted for three months. Questionnaires will be issued and also surveys will be
conducted. Data will be collected from volunteers who are willing respondents.
 CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter will review the existing literature on the impact of VAT on the
healthy lifestyle of Saudi individuals by looking into the theoretical and empirical
reviews on VAT while giving a critical review and conceptual framework of the
variables of the study.

2.1 Theoretical Review

2.2.1 Health Belief Modell
The Health Belief Model is a tool that is used to try to predict health behaviors.
The theory was first developed in the 1950s by Godfrey Hochabaum, Irvin
Rosenstock, and Kirscht (Boskey, 2008). The theory states that a person's
willingness to their health behaviors primarily comes with their health perceptions.
The model suggests that individual beliefs about health and health conditions are
pivotal in determining health-related behaviors.

The model suggests components of the health belief model. The probability that a
person will change behavior is to avoid a consequence (Boskey, 2008). Concerning
VAT the avoided consequence is spending more money on the products being
regulated. In perceived susceptibility, people do not change behaviors unless they
believe they are at risk.
The model also claims that people do not change their health behaviors because
they think it is too hard. Introduction of VAT forces people to change their health
behaviors even though they think it is hard. Cues to action is another important
aspect that the VAT tackles in changing the health behavior of people. Wanting to
change a healthy behavior is not enough to make someone do it.

2.2.2 Theory of Planned Behavior

The Theory of Planned Behavior examines health behaviors. The model suggests
that the most important determinant of an individual's behavior is their intention to
perform that behavior (Lindgren, 2021). The theory uses three cognitive variables
to direct determinants of intentions. The variables are attitude, subject norms, and
perceived behavioral control.
According to the model, attitudes range from negative to positive and are
influenced by situational factors. VAT is a situational factor that influences how
Saudi individuals consume unhealthy products. Perceived behavioral control
represents the extent to which someone feels they have control over performing a
desired behavior when faced with internal and external barriers (Lindgren, 2021).
In the context of this research, the external barrier is VAT which is imposed by the
government.
2.2 Empirical Review
According to Bosire et al., (2020) sugar-sweetened beverages (SSB
) tax was introduced in South Africa. The tax is a way that the government intends
to reduce the consumption of sugar-sweetened beverages in Soweto. There are
however various risks that are associated with the implementation of SSB tax. The
risks involved are consumption and associated risks. Results of the research
showed frequent SSB consumption which is attributed to habit, addiction,
advertising, and wide accessibility of the product. Many people who participated in
the research said that they were not aware of the imposition of tax on SSB in the
country.

According to Fletcher et al., (2010) soft drink consumption is among the main
factors that lead to obesity in the United States of America. The government had to
come up with a way to reduce the consumption of the product. There was the
imposition of taxes on soft drinks using excise taxes, sales taxes, or special
exemptions to food. The introduction of the tax on soft drinks came with various
advantages such as a reduction in the consumption of the product, an increase in
the amount of revenue collected, and a massive improvement in public health.
Results of the research showed that the imposition of taxes on soft drinks
influences body mass index.

According to Fletcher et al., (2010), childhood and adolescent obesity is associated

with serious lifetime health consequences and there is a recent increase in its
prevalence. The researchers try to investigate the potential for soft drink taxes to
restrain the rising levels of adolescent obesity. The results of the research indicated
that the taxation of soft drinks leads to a moderate reduction in the consumption of
the product by both children and adolescents. The research further showed that the
reduction in the consumption of soda is completely offset by increases in the
consumption of other high-calorie drinks.

According to Baker et al., (2018), taxes on soda can change consumer behavior,
generate significant revenue, and incentivize the product's reformulation. The
imposition of taxes on soda is imperative to the country as well as an established
instrument of fiscal and public health policy.

According to WHO (2017), sugar drinks are a major contributor to obesity and
diabetes in the world. It is noted that the most affected people are children and
adolescents.

According to Shukeri & Alfordy (2021), VAT was introduced in Saudi Arabia to
supplement income derived from oil reserves. According to the researchers, oil
reserves were the only source of income in Saudi Arabia; it was, therefore, hard to
rely on only one source of income. An increase in the rates of taxes collected
suggests a different pattern of consumption behavior.

2.3 Research Gap

From the literature in the empirical review, value-added tax impacts people's
healthy lifestyles. The research further used an example of soft drinks, which cause
obesity. From the literature, the imposition of taxes affects how people consume
those products. However, the research did not consider other factors that lead to
obesity apart from those mentioned. The other gap is also that imposition of VAT
is not the main factor that impacts the lifestyle of people; there are also other
stakeholders.
2.4 Conceptual Framework
Independent Variable Dependent Variable
VAT Healthy Lifestyle

Cost of healthy foods

 Price per unit

Consumption of healthy foods

 Self-reported dairy intake

Availability of healthy food Healthy lifestyle

options Health behavior surveys
 Food price surveys

Cost of gym membership and

fitness equipment
 Price per month or year

Participation in physical
activities
 Self-reported physical
activity
Intervening Variable
 Government policy

2.5 Conceptual Framework Operationalization

The figure conceptual framework shows the relationship between the dependent
and independent variables. Value Added Tax is the dependent variable, and a
healthy lifestyle is the independent variable. Also indicated in the variable are
various ways both variables are measured.
 CHAPTER 3
RESEARCH METHODOLOGY
3.0 Introduction
This chapter represents the research methodology that is used in researching the
impact of VAT on the healthy lifestyle of Saudi individuals. The chapter involves
the research design, data collection, analysis, and ethical considerations.

3.1 Research Design

This study will use a cross-sectional design to collect data. The data collected will
be quantitative. Quantitative data will be used because it allows the researchers to
explore and understand the experiences, perspectives, and behaviors of individuals
in depth. The quantitative approach is imperative because it will enable researchers
to understand how Saudi individuals understand and perceive VAT and its impact
on their ability to maintain a healthy lifestyle.

3.2 Sampling technique

A sample of Saudi individuals will be used in the study. The research employs a
random sampling technique in which individuals are randomly selected as a subset
of participants from the population. The recruitment method is simple in that
whoever is willing to participate will have a chance. Potential biases may arise
where most readily available people are the youth, leading to age bias.

3.3 Data Collection

Data that is collected will be secondary. There will be various ways of collecting
data. Surveys will be distributed online to respondents. A structured questionnaire
will also be a data collection tool. The questionnaire will be based on participants'
assessment of their perceptions of the impact of Vat on the cost and availability of
healthy food options and fitness-related expenditures. The survey will consist of
closed questions and be conducted in Arabic and English. Data that will be
collected will be of good quality because trained interviewers will be used, and a
detailed interview guide will also be developed.

3.4 Data Analysis

 Quantitative data from the survey will be analyzed using descriptive statistics and
inferential statistics such as chi-square tests and regression analysis. Data will be
recorded on tables and charts.

3.5 Ethical Considerations

This research will adhere to ethical guidelines for research involving humans.
Survey and interview participants will be informed about the purpose of the study
and their rights as participants. Participation will be voluntary, and informed
consent will be obtained from all participants. The data will remain confidential
and anonymous, and participants will also be protected.

3.6 Limitations of the Study

The research will likely face some limitations, including insufficient sample size,
which leads to inadequate data collection. There is also the issue of sampling bias,
whereby the sample may not be representative of the population of interest. Budget
constraint is also a significant issue which is a lack of resources. The study may
also face limitations from ethical considerations.
 References

Al-Jasser, M. A., & Al-Juhani, A. S. (2019). The impact of value-added tax on the
retail industry in Saudi Arabia. International Journal of Economics,
Commerce and Management, 7(7), 40-51.
Alzahrani, S. H., & Ahmad, S. (2019). The impact of value-added tax on consumer
behavior in Saudi Arabia. Journal of Applied Accounting Research, 20(1), 2-
20
Baker, P., Jones, A., & Thow, A. M. (2018). Accelerating the Worldwide Adoption
of Sugar-Sweetened Beverage Taxes: Strengthening Commitment and
Capacity: Comment on" The Untapped Power of Soda Taxes: Incentivizing
Consumers, Generating Revenue, and Altering Corporate
Behavior". International journal of health policy and management, 7(5),
474.
Bosire, E. N., Stacey, N., Mukoma, G., Tugendhaft, A., Hofman, K., & Norris, S.
A. (2020). Attitudes and perceptions among urban South Africans towards
sugar-sweetened beverages and taxation. Public health nutrition, 23(2), 374-
383.
Boskey, E. (2008). What is the health belief model? Verywell
Mind. https://www.verywellmind.com/health-belief-model-3132721
Euromonitor International. (2016). The impact of the 2018 value added tax (VAT)
on the food and….
Euromonitor. https://www.euromonitor.com/article/impact-2018-value-
added-tax-food-drinks-industry-investments-uae-saudi-arabia
Fletcher, J. M., Frisvold, D. E., & Tefft, N. (2010). The effects of soft drink taxes
on child and adolescent consumption and weight outcomes. Journal of
Public Economics, 94(11-12), 967-974.
Fletcher, J. M., Frisvold, D., & Tefft, N. (2010). Can soft drink taxes reduce
population weight?. Contemporary economic policy, 28(1), 23-35.
Jalloun, Rola Adnan, and Moataz Abdulsattar Qurban. "The Impact of Taxes on
Soft Drinks on Adult Consumption and Weight Outcomes in Medina, Saudi
Arabia." Human Nutrition & Metabolism, vol. 27, 2022, p. 200139.,
https://doi.org/10.1016/j.hnm.2022.200139.
Lindgren, K. P. (2021). Theory of Planned Behavior.
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planned-behavior
Sarwar, S., Streimikiene, D., Waheed, R., Dignah, A., & Mikalauskiene, A. (2021).
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Shukeri, S. N., & Alfordy, F. D. (2021). Valued Added Tax (VAT) Impact on
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 Appendix
Questionnaire
Questionnaire
Phase 1 Questionnaire
Section 1: Demographics
1. What is your gender?
a. Male
b. Female
c. Prefer not to disclose
2. What is your age range?
a. 18-24
b. 25-34
c. 35-44
d. 45-54
e. 55 and above
3. What is your monthly income range?
a. Less than SAR 5,000
b. SAR 5,000 - SAR 10,000
c. SAR 10,001 - SAR 15,000
d. SAR 15,001 - SAR 20,000
e. More than SAR 20,000
Section 2: Impact of VAT on Cost and Availability of Healthy Food Options
4. Do you believe the introduction of VAT has affected the cost of
healthy food options in Saudi Arabia?
a. Yes
b. No
5. If you answered yes to the previous question, how much do you think
the cost of healthy food options has increased?
a. Less than 5%
b. 5% - 10%
c. 11% - 15%
d. 16% - 20%
e. More than 20%
6. Do you believe the introduction of VAT has affected the availability
of healthy food options in Saudi Arabia (Jalloun and Qurban)?
a. Yes
b. No
7. If you answered yes to the previous question, how has the availability
of healthy food options changed?
 a. Increased
b. Decreased
c. Stayed the same
Section 3: Impact of VAT on Fitness-related Expenses
8. Do you believe the introduction of VAT has affected the cost of gym
memberships and fitness equipment in Saudi Arabia?
a. Yes
b. No
9. If you answered yes to the previous question, how much do you think
the cost of gym memberships and fitness equipment has increased?
a. Less than 5%
b. 5% - 10%
c. 11% - 15%
d. 16% - 20%
e. More than 20%
10.Has the introduction of VAT affected your participation in physical
activities and exercise?
a. Yes
b. No
11.If you answered yes to the previous question, how has your
participation in physical activities and exercise changed?
a. Increased
b. Decreased
c. Stayed the same
Section 4: Additional Questions
12.How often do you eat healthy food options?
a. Daily
b. A few times a week
c. Once a week
d. Less than once a week
e. Never
13.How often do you engage in physical activities and exercise?
a. Daily
b. A few times a week
c. Once a week
d. Less than once a week
e. Never
14.Have you noticed any other effects of VAT on your lifestyle?
a. Yes
b. No
Phase 2 Questionnaire
1. Can you tell me about your typical diet before the introduction of
VAT? What types of foods did you eat, and how often?
2. How has introducing VAT affected the cost of healthy food items in
your area? Have you noticed any changes in the availability of healthy
food options?
3. Have you changed your diet or eating habits since the introduction of
VAT (Jalloun and Qurban)? If so, what changes have you made and
why?
4. How has the introduction of VAT affected your ability to maintain a
healthy lifestyle, including physical activity and exercise? Have you
noticed any changes in the cost or availability of gym memberships or
fitness equipment (Jalloun and Qurban)?
5. Have you found ways to cope with the increased cost of healthy food
items or fitness-related expenses? If so, what strategies have you
used?
6. Do you think the introduction of VAT has significantly impacted
Saudi individuals' healthy lifestyles? Why or why not?
7. Is there anything else you would like to share about your experiences
and perceptions of the impact of VAT on your healthy lifestyle?