Abu Dhabi’s municipal fees will help build the economy

Municipality fees have begun showing up on the water and electricity bills of expatriate residents of Abu Dhabi. The fees, which amount to 3 per cent of tenants annual rents, are backdated to February 2016, when the municipality fee law came into effect. While the measure is not new and has been debated in these pages, the sudden appearance of the fees and the requirement of paying back fees in one single sum has left many people upset and worried. This is an understandable reaction to a charge that few had sufficient time to plan and save for.

That is not to say that the municipality fees are a poor idea. Quite the opposite. These fees will enable the municipalities of Abu Dhabi to continue infrastructure projects, develop other areas of the emirate and ensure that the economy remains nimble in uncertain times spurred on by low oil prices. Other emirates such as Dubai have had similar fee schemes on the books for several years. Put simply, these fees will be pay long-term dividends for many sectors of society.

But that doesn’t change the shock of having a large bill from Abu Dhabi Distribution Company, which is collecting the revenue on behalf of the Municipalities. The core of the problem is that residents were not sufficiently informed of when the new fee structure would come into effect and that the back charges would be required in one lump sum. In some cases, residents will be forced to pay the back fees on credit or by taking out a loan. Such developments are not good for the long-term health of the economy.

There should have been a wide-ranging public awareness campaign that included regular announcements outlining the nature of the change in media and via text messages. With residential rents falling in Abu Dhabi and employers still hesitant to increase salary, dramatic changes to any fee burden hit middle- and lower-income families particularly hard.

As these changes take effect, it is critical for authorities and residents to work together. Authorities must be clear about current and upcoming changes while residents should prepare to cover those changes accordingly. As with any transition to a new system, there will be some bumps in the process. With VAT set to take effect in 2018, authorities can learn from the current situation and ensure that future transition processes are smoother.

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