JORDANIAN GOVERNMENT’S EFFORTS TO SELL TAX CHANGES ARE BACKFIRING
▶ At public meetings across the kingdom, officials are met by anger, jeers and outright refusals to talk
As statements go it could be classed as both carrot and stick.
“As private individuals, you are welcome,” Majed Sharari, the former mayor of Ma’an, a city in southern Jordan, told several ministers in a video that circulated this week.
“But as government representatives you are not welcome anywhere in Jordan. You and your income tax law are not welcome in the Jordanian street.”
His sharp words were perhaps the most diplomatic message that the government has received while trying to pitch a controversial income tax law, the issue that brought down a government three months ago.
In meetings, government ministers have met tough questions, ridicule, frustration and all-out anger from citizens.
The first such meeting ended abruptly in Tafilah, a town in southern Jordan, on Saturday, while in the northern town of Mafraq – normally a bedrock of government support – citizens raged that they should not “pay the price” of officials’ mismanagement.
And on Wednesday, citizens disrupted then jeered the visiting delegation in the northern city of Ajloun. The crowd erupted into cheers as the ministers were led off stage.
In what now seems like dramatic understatement, Prime Minister Omar Razzaz cautioned that “it is not easy to sell the law to the public” when he unveiled the draft law last week for discussions.
Jordan’s economic outlook is challenging, but even the prime minister could not have predicted such a hostile reaction to the government’s efforts.
It is not just citizens who are fuming about the tax law. The mayor and municipal council of Zarqa, in Jordan’s north-east, were elected last year as part of a decentralisation of powers from Amman. They boycotted the meeting in their area.
Professional associations and the unions that led protests and work stoppages that brought down the previous prime minister over a similar law have also shunned the latest meetings.
Protesters and citizens have drowned out ministers with chants demanding Mr Razzaz’s resignation, less than three months since he was sworn in.
The law is considered a priority for the government as it attempts to control Jordan’s debt, currently at 28 billion Jordanian dinars (Dh145bn), 96 per cent of the country’s gross domestic product. The country’s debt level has hovered around 90 per cent of GDP for years, and spurred the previous government to embark on austerity measures that included cutting subsidies for bread and electricity.
The new law is expected to generate an extra 360 million dinars in 2019.
While the sum is small compared with the national debt, the tax reform was deemed essential to Jordan continuing to receive a $723m (Dh2.65bn) credit line from the International Monetary Fund. Abandoning the tax plan would result in the kingdom paying additional interest on hundreds of millions of dollars worth of loans, the government said.
Jordan’s deputy prime minister was more blunt, saying that the government was dealing with a “lack of confidence” from the IMF.
But citizens have been doing their homework.
The current law provides a tax exemption for all households with an annual income less than 24,000 dinars. Under the new law, eligibility for tax exemptions will drop to 18,000 dinars per household in 2019, and to 17,000 dinars in 2020.
The current income tax law includes a package of additional tax exemptions and deductions of up to 4,000 dinars based on the number of dependents, medical care, university tuition and even rent. These secondary exemptions would be scrapped by the new law.
Citizens say that with a rising cost of living, an 18.7 per cent unemployment rate, higher electricity bills and rent, and stagnant salaries, the new law is a death knell for many families.
“Poverty has become a widespread phenomenon in Jordan. People are coming in to buy a 25-cent packet of rice or two eggs to feed their family,” Mousa Shatnawi said from his supermarket in Mafraq, Jordan.
“Any increase in tax will lead to an increase in prices, and people’s salaries are the same. This is a disaster for many.”
The government is not backing down, insisting that the existing tax structure is unjust; 17.3 per cent of the government’s revenues come from sales tax on goods and services, almost six times more than the 3 per cent the government is receiving from income tax.
But it is more than simple frustrations that are being felt. Citizens accuse the government of failing to clear up corruption, even demanding “who is behind Aoun Mattiya?” – the main suspect in a counterfeit brand cigarette case many believe is merely a frontman for influential elites in the halls of power.
Others have called out “where is Kurdi?” – referring to the husband of the king’s aunt who was sentenced to 37 years in prison for embezzling millions but who is at large in Britain.
Jordan’s privatisation programme, started more than a decade ago, is also a subject of ire, with officials accused of selling assets off too cheaply, mismanaging them, or stealing funds from the sales. It is a sentiment many agree with.
“Successive governments either stole or turned a blind eye to the theft of aid money and government contracts,” said Hussein Khaled, a 28-year-old farmer in Mafraq.
“We refuse to foot the bill.”