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French Version

Taxes aimed at benefit for Kingdom puts burden on the people

There are no specific calculations for the amount individual Jordanians pay toward taxes each month, but local research suggests an average Jordanian-of low to middle-income-pays about 60 percent of their salary back through taxes.

Abu Asaad can often be found complaining of his monthly outlay to the government.

Including the monthly JD 100 rent, Abu Asaad has watched his monthly expenses rise to JD 250. This includes taxes he must pay on electricity, water, and telephone bills, as well as foodstuffs, medicine, the Income Tax and Customs duties on cars. "What else is left for us?" asked Abu Asaad, with a monthly average income of JD 500. "There is nothing left for me to use to provide for my family."
Officials at the Sales Tax department have indicated the most recent increases were done to adjust the balance of payments to both the World Bank and the International Monetary Fund (IMF) and to support the socio-economic transformation plan now in place. Officials emphasized that bread and olive oil, presently not taxable under the recent increase, will not be put under sales tax for the foreseeable future.

There are no specific calculations for the amount individual Jordanians pay toward taxes each month, but studies by local research centers suggest an average Jordanian-of low to middle-income-pays about 60 percent of their salary back through taxes.

It is a devastating reality for a great deal of the Kingdom's 5 million people, one-fifth of whom are below the poverty line. "Without my wife's job I could not make it," Abu Asaad said. Many Jordanians feel the new 2 percent tax on both imported and locally produced pharmaceuticals and foodstuffs is an untenable tax that principally affects the economically deprived.

Economists warn such a continued tax burden could soon affect Jordan's social stability. "The government's current taxation policy aims primarily to adjust its balance of payments. The only solution for the government is the people's pockets," said Dr Munir Hamarneh, a professor of economics at the University of Jordan.

The government is expected to earn some JD 600 million a year from total sales tax receipts, following the recent 2 percent increase in June. The increase alone is expected to generate no less than JD 25 million. "How will investments assist social development if no one can take advantage of these projects right away?" asked Mohammed Al Zaga, an accountant working for a private firm since 1995. "Taxes today are becoming more like the sword of the executioner."

The government is employing tax revenues to pay down its debts and continuing public expenditure. "It is clear the Kingdom's economy requires new policies and new faces as well," said economist Ahmed Al Namri. noting indirect taxes, like sales tax, are burdening people's lives too greatly. "It is clear current policies are part of conditions created by the International Monetary Fund to approve and continue Jordan's reforms program."

A father of two, Al Zagga cannot see how recent sales tax increases are a help to the economy. "I believe the government has become a pawn for the IMF and other world financial institutions. They do not care about Jordan but only about dominance over developing economies," Al Zaga told The Star. "My greatest concern is over how to provide for my two children, still under 15, with all their daily needs of food and medicine. If I have to pay all my salary on taxes it will be a catastrophe not only for my own family but, in the end, for the entire society."

Suhair Issa, a civil servant working at a public department since 1993, earns JD 250 a month. She is married with three children. Suhair believes her living standard was much better five years ago. Though her husband also provides income, Issa believes her kids are deprived from good care because of the increased cost of living.

"We are saving part of our income for the future of our children. They need to live a decent life as we do now. No body knows what the future will bring for us," she said.

The Minister of Finance, Michel Marto, explained the government's decision to impose a 2 percent increase as a method to improve the living standards for all Jordanians and reduce rates of poverty and unemployment. Others have questioned such an explanation.

"If the government is working for the poor why did it recently decide to cut Income Tax on the rich by 20 percent to 25 percent. Britain, Europe's richest country, has not taken such actions," Al Namri said. "Will the rich in Jordan be helpful to the government's financial demands? I strongly doubt it."

Economist Hamarneh asked the government to consider revising economic policies and reducing public expenditure, Al Namri wants parliamentary elections to take place soon. "The government is working with no real public control. We need a strong and effective parliament to balance government policies."

Ghassan Joha
The Star

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