Economists Warn Against Expanding Tax Base in Fear of Poverty Rising

تم نشره في Wed 6 September / Sep 2017. 12:00 AM
  • Ministry of Finance, Income and Sales Tax Department - (Archives)

AMMAN —AlGhad— Several economists and financial experts have voiced concerns over the government’s amendment to the tax law, which will expand the taxable base of Jordanians.

Economists warn that any such amendments will surely drive up poverty and further economic contraction.

It will increase inflation and erode the economy’s purchasing power.

Financial expert Mufleh Aqil said that the bill of amendments to the tax law is harsh and economically intolerable.

The fact that 97 per cent of Jordanians do not pay income tax, Aqil responded to the statements of Media Minister, Mohammad Momani, is because they cannot afford it.

Undoubtedly, the overwhelming majority of Jordanians fall within the fixed to low income segments of society, which cannot afford to pay income taxes, Aqel reaffirmed.

The suggested amendments expand the taxable demographic base to include individuals and households making respectively JOD6,000 and JOD12,000 and above, annually.

However, the Minister Momani stated that these figures and rates are just suggestions, and that the amendments have not been finalised yet.

Currently, the extended allowances exclude all annual incomes below JOD12,000 and JOD24,000 per individual and household, respectably.

Should these amendments pass, says economist Mohammad Bashir, they will “cause an economic setback”.

Increasing the income tax, according to Bashir, should not be considered so long that the sales tax stands as one of the highest in the whole region, at 16 per cent.

There are certain measures and criteria which come with the expansion of the income tax, in order to make sure such amendments do not backfire, Bashir underlined.

On the other hand, economist Zyan Zawaneh said that increasing income taxation will reflect negatively on investment, both foreign and domestic, which is crucial to the economy.

More so, Zawaneh confirmed that a significantly large part of the citizen’s income already goes directly to sales taxes, which is why most Jordanians cannot afford income tax.

Taxation comprises around 27 per cent of the average Jordanian salary, pushing more and more people to borrow money, in order to make do, Zawaneh told AlGhad.

Unstable taxation policies do not reflect positively on the economy, he reiterated.

Moreover, Zawaneh denounced the statements of the Minister of Finance, who repeatedly said that these amendments were imposed by the International Monetary Fund (IMF).

On the matter, Zawaneh exclaimed, questioning Jordan’s sovereignty when it comes to such a sensitive decision.