Regret is off the Table…

By Jumana Ghunaimat

تم نشره في Sat 12 November / Nov 2016. 01:00 AM
  • Jumana Ghunaimat

So far, the government has yet to justify the reasoning behind lowering sales tax on commodities and services from 16 to 12 per cent, and raising taxation for exempt and 0-tax commodities, as well as those taxable at a median rate of 4 per cent.

Most commodities and services are eligible for a 16 per cent sales tax, save for some taxable by 4 per cent, while some projects incur 0 taxes. Alternately, the government is looking into instating a uniform 12 per cent tax.

Accordingly, the government did not explain to us the expected outcomes of these decisions, and how it will effect revenues from sales taxes, standing currently at roughly JOD4.5 billion annually? And how will this step sustain tax revenues at the same levels, at least, without regression?

Many questions are raised in regards to reasons behind this decision at a most unfitting time, seemingly; growth is very low, and is not even enough to meet the budget deficit, in addition to the shrinkage in grants and aid. Combined this all means that we need more revenue, not less! Even sustaining it won’t cut it!

Typically, concerns are that these decisions have not been thoroughly reviewed and considered, and that they may deepen the financial crisis, exactly the way governmental restructuring some years ago was passed without careful considerations, incurring an additional JOD750 million to the budget, culminating the deficit, and complicated the financial reformation process terribly.

Any plan to lower sales taxation, without thorough consideration of the financial repercussions would constitute another massive new blow to the financial reformation process; and should the reviews not be sufficiently proficient to reaffirm that revenues will sustain, this only means more deficit, more loans, and more complications in the implementation of the financial reform programme!

More so, this doesn’t seem like the right time to increase taxation on foodstuff, in addition to consumers not having any excess income to cover the expected increase on foodstuff and pharmaceutical costs.

Unsophistication is not an option; the common discourse has no place in this rising turmoil. There is no margin for uncalculated decisions, particularly ones with unknown financial repercussions; all we have no is no more than a bundle of leaks by people with the International Monetary Fund (IMF), and the recommendations of the Economic Policy Council (EPC).

Mind you, have we the luxury to lower taxes, this article would not have been written! Were we in a state of economic prosperity and growth, the questions above would not be raises. Notably, what is needed is that these decisions are thoroughly, scientifically, and objectively inspected, and if seen fit and promising; feasible, that is, then Godspeed!

Now on the other hands, should the government have all the answers, it would be wise to share views with the public, explain purposes and objectives, as well as expected results, because taking such a decision would incur catastrophic consequence and more crises.

Another concern is that this government is looking to lower taxation in order to aggregate popularity, on the expense of the budget… has this decision really been —comprehensively— reviewed?

Even though taxes are high, consumers have gotten used to it, and amending the sales tax regulation is not a pressing demand, for now; so why is the government looking into it now? Will its implementation result in an irreversible revenue loss of hundreds of millions?!

Sadly, it has been typical for governments, over the years to take random, naïve decisions, and for us to stumble upon them, without the slightest clue on why these decisions were taken, nor any thorough, professional studies on these decisions and expected outcomes. Is it any different this time?! Personally, and practically speaking, I am all for lowering taxes, but this goes beyond that to a much more complicated issue that is deeply tied to the Country’s financial and monetary stability.