Saudi Arabia introduced the VAT in 2018 in response to the nation's structural budget deficit caused, in large measure, by its dependence on revenue from oil and natural gas production. Initially the tax rate was 5 percent, but in July 2020 the rate was tripled to 15 percent. This dissertation examine the effect of the introduction of a value-added tax (VAT) on governance in Saudi Arabia. Specifically, we explore how the VAT's introduction has altered the Saudi bureaucracy, both its responsiveness and representativeness, and what is VAT effect on growth in GDP, public unemployment, and changes in national budget. The data used to analyze these research questions are collected from several sources including the Saudi General Authority for Statistics, Saudi Ministry of Finance, and World Bank. Different methods of analysis were used such as ordinary least squares, difference in differences, and least squares dummy variables to answer the research questions. The study found that VAT is associated with an increase in GDP per capita, and VAT was negatively associated with total debt per capita, deficit per capita, and non-Saudi unemployment. In addition, government spending did change after the introduction of VAT to internal development more than external focus. Finally, VAT …