Kuwait will eventually have to impose taxes on personal income, the Emir was quoted as saying.

"The service provided to nationals comes at a very high cost which can be shouldered by the state for some time but not all the time. There will come a day when the state will find itself obliged to impose taxes," Sheikh Sabah Al-Ahmad Al-Sabah told new local newspaper Al-Nahar in an interview.

"No doubt the situations of people with low income will be taken into consideration," said Sheikh Sabah in the interview picked up by the state news agency Kuna.

Kuwaitis have long been accustomed to a cradle-to-grave welfare state with benefits ranging from large long-term housing loans and marriage grants to free education and health services.

As in other Gulf oil-producers, petrodollars have buoyed the welfare system that many economists say cannot be sustained as a growing population puts increasing pressure on state coffers.

"Oil will not last forever," said Sheikh Sabah.

Kuwaiti MPs have long said they would reject taxing the income of Kuwaitis until the government prevents the waste of public funds and stamps out corruption.

Kuwait wants to diversify its economy to emulate the success of nearby Dubai and Bahrain, which have cut their reliance on oil by transforming themselves into financial and commercial centres. - Reuters