Saudi Arabia after reduced profits from oil extraction is worried to create new sources of income for the state. So now they have introduced ‘sin tax’ which is applicable on cigarettes & soft drinks.
After the introduction of the tax the prices has soured up and cigarettes are being sold at double prices just after one new tax. Similarly the prices of international & imported soft drinks have also increased while local manufacturers have decided to decrease the amount of the liquid.
The government is claiming that it will demotivate people from purchasing harmful items such as cigarettes which causes cancer and soft drinks which are a significant reason for diabetes.
But it is believed that the main reason behind this law is to create new sources of income for business. The oil profit is law and it is believed that after 20 years Saudi Arabia will not be able to sustain the current level of oil production.