Anger mounting in Jordan over tax law

The proposed law would make end-of-service benefits subject to income tax, an issue labelled by many as unconstitutional.
Sunday 30/09/2018
Jordanian Prime Minister Omar Razzaz during a meeting with union leaders in Amman, last June. (AFP)
Taxation controversy. Jordanian Prime Minister Omar Razzaz during a meeting with union leaders in Amman, last June. (AFP)

AMMAN - Jordanian cabinet members touring the country to promote a proposed income tax law met strong recriminations and demands to review the legislation.

Widespread opposition to the law might trigger a new wave of protests. Public demonstrations toppled the government of Hani Mulki in June.

Omar Razzaz, a former World Bank economist, took over the prime minister’s office with a pledge to resolve the taxation controversy but amendments to the income tax law caused public disappointment and scepticism about his ability to do so.

Residents of Tafileh, Ma’an, Mafraq, Jerash, Zarqa and Ajloun rejected the chance to speak with the touring ministers and asked them to leave. They said the proposed tax law too closely resembles the draft legislation that triggered nationwide protests earlier this year.

“The new law that the ministers are seeking to promote looks very much like the previous one, which led to the resignation of Mulki’s government and this is unacceptable,” said Ahmad al-Azraq, 33, a shop owner in Amman.

“We want to have the law reviewed or cancelled. We citizens have had enough and we are unable to afford daily expenses anymore and now they want to have a share of what we make. This is unfair.”

“I understand that in other countries the tax is high but they have better public services in return and people trust their governments Here we are losing trust in the ability of the government to improve the lives of citizens who are working hard to provide bread to their families. If people do not have money to buy, then businesses will suffer and our families will suffer and we will never let our children suffer,” Azraq said.

He said the government should reduce expenditures and do something about corruption and not worry about “our pennies.”

Many Jordanians said they consider the bill “unfair.”

“How come the increase will affect all sectors except the banking sector? Why would the government want to deduct an income tax from pensions?” asked Abdullah Fraih, 25, an employee at a supermarket who attended a special seminar on the tax law in Amman.

The proposed law would make end-of-service benefits subject to income tax, an issue labelled by many as unconstitutional.

“We only hear promises but no one delivers anything. Jordanians have suffered a lot and are still suffering and we need this to stop,” Fraih said. “I think the government should review the tax burdens, notably the sales taxes, income tax and other fees, after consulting with experts and specialists from all sectors and institutions.”

Participants at the Amman seminar unanimously requested the government postpone adoption of the draft law and revise the entire tax matrix in view of the stressful economic and social conditions that Jordan endures.

Jordan reached a lengthy funding agreement with the International Monetary Fund (IMF) and the tax bill is part of the reforms demanded under the deal, which seeks to generate $394 million in additional revenues in 2019, $253 million of which will be collected from expanding the taxpayers’ base. The rest would come by combating tax evasion.

Jordan’s public debt reached $37.5 billion in the first seven months of this year, compared to $35.8 billion at the end of 2017, the Ministry of Finance said.

The IMF warned that any measures to increase revenues should refrain from imposing taxes on the poor and increasing their burden.

Jordanian Deputy Prime Minister, Rajai Muasher said the IMF asked that the Jordanian parliament approves the current draft of the law. The measure is to be posted on a government website for a 10-day public review and comment. It will then be sent to the House of Representatives for consideration.

Razzaz said the new bill “was developed without dictation from any (outside) entity and will help achieve the desired fiscal reforms, which, in turn, will contribute to lowering borrowing costs for the country.”

He stressed that “it is not easy to sell the law to the public” considering the difficult economic conditions, though it targets most of all “well-to-do companies and individuals” and not the poor and middle class.

The proposed law exempts families whose yearly income does not exceed $25,000 and provides an additional exemption of $5,641 for households that present bills of a certain amount for medical treatment or education expenses. It exempts individuals whose yearly income does not exceed $13,000.

Citizens took the government to task on social media. Moayad Akram posted on Twitter: “Approve the new law and we will meet you at the Fourth Circle (where the prime minister’s seat is located). Zuhair Melhem tweeted: “Forget the tax law and you better recalculate it in a correct way.” Some asked Razzaz to resign because “he put the last nail in his coffin.”