Jordan’s new tax-reform proposal faces strong criticism

Opposition to new proposal grows amid claims that the government has done nothing to tackle corruption.

Said Husam Abu Ali [Ali Younes/Al Jazeera]
Abu Ali, head of Jordan's Income and Sales Tax Department, said the proposal would 'achieve more equitable redistribution of responsibilities and social solidarity' [Ali Younes/Al Jazeera]

Amman, Jordan – Jordan’s much-anticipated tax reform proposal has been labelled not “substantive” after it was months after mass protests that led to the resignation of Prime Minister Hani al-Mulki.

Among other things, the fresh proposal, made public on Tuesday, aims at defusing the popular anger over fiscal reforms by abolishing the rule that required every citizen above 18 to register with the national tax department.

It also exempts families earning less than 18,000 dinars ($25,000) or individuals earning under 9,000 dinars ($12,500) annually, from filing a tax return.

The new proposal, which Prime Minister Omar al-Razzaz said would “help achieve the desired fiscal reform”, will go through consultation and mandatory legislative process before it becomes a law.

Al-Razzaz, a Harvard-educated economist, was appointed by Jordan’s King Abdullah II in June to restore order in the wake of huge demonstrations against al-Mulki’s tax-reform plans, which proposed raising the income tax by at least five percent.

Soon after his appointment, al-Razzaz dumped the controversial proposals and promised to deliver a fair and equitable taxation system, which targets high earners and exempts the country’s poor.

‘Lack of trust’

Critics, however, said the tax reform was not “substantive” and did nothing to assure the people that corruption will be tackled.

“The real issue for the public is not just a new or old tax law, but rather the lack of trust in the government or its intentions,” opposition leader Hussam Abdallat told Al Jazeera.

The new law will also abolish taxes imposed on the agricultural sector as an incentive to encourage farmers. It will reduce their costs and impose taxes on other sectors to make up for the shortfall.

Jordan ranked 57th in Transparency International’s 2017 corruption perceptions index, down 11 places from 2016. 

Abdullah Ghoshe, an engineer working in capital Amman, said successive Jordanian governments have failed to combat poverty, curb national debt and fix the country’s fledgling economy.

“The new proposal is basically a repackaging of the old law. The changes are only cosmetic,” said Ghoshe. “How can we pay taxes when we cannot find work?”

Khaled Salaymeh, a cardiologist in Amman, said that the government was “robbing” the public in order to cover up for its failures which were evident from the falling infrastructure and rising debt.

“I don’t trust this government or any other Jordanian government for that matter,” said Salaymeh who added that he sent his children to study in another county because he “doesn’t want them to come back to a country that does not respect its own citizens”.

“My generation accepted the conditions that exist in the country today. My children won’t.”

‘Social justice’

Unemployment in Jordan, home to more than 10 million people, is approaching 19 percent, while 20 percent of its population is on brink of poverty. 

Husam Abu Ali, head of Jordan’s Income and Sales Tax Department, said the government’s proposal would achieve more equitable redistribution of responsibilities and social solidarity among different segments of the population.

“This law is specifically designed to achieve social justice and to help the poor, especially in the areas of healthcare, transportation and education,” Abu Ali said.

Jordan’s mounting national debt, which has reached over 95 percent of its gross domestic product (about $40bn), has also prompted critics to argue it has become beholden to the International Monetary Fund (IMF) and other international lenders.

Jordan secured a $723m three-year credit line from the IMF in 2016 and promised tax reforms in return, which sparked some of the biggest economic protests in the country this year.

Abu Ali denied the claims.

“The government’s objective is to provide its citizens proper services through transparent and fair taxation law, regardless of what the IMF and other lenders think,” he said.

Source: Al Jazeera