Low-income segment will bear burden of new Income Tax Law — economists

AMMAN —  Economists and government officials on Monday gathered at the Friedrich Ebert Foundation to discuss the appropriateness of the new income tax law’s timing, and its repercussions on the lower and middle classes.

During a session titled “The New Income Tax Law: Expectation vs Reality”, economic and political expert Zayyan Zowana stressed that “the social and economic standing of the Jordanian people is not appropriate right now for this law”, a vision opposed by the General Director of the Income and Sales Tax Department Hussam Abu Ali, who explained that Jordan, a country whose public debt rose in April of this year to 96 per cent of the GDP, “does not have the luxury of delaying this law”.

 “Countries think of reducing taxes when they don’t have pressure of meeting certain requirements. We obviously cannot do that right now,” Abu Ali stated.

Referring to the country’s deal with the IMF over a three-year $723 million funding programme to support structural reforms in the country, he said: “We cannot take the fund and then later on not hold up to our end of the deal. This is a complete reform plan, and the tax law is a part of it.”

Touching upon the distribution of the law’s burden, the session’s moderator Jumana Mustafa  asked if it was appropriate for the government to ask the middle and lower classes “who have already started to possess feelings of hate and aggression towards the government” for more contribution.

Economists cited the national tax evasion figure — over JD650 million — to question if the law would oblige the elite to pay their share, or if it would “all end up on the lower and middle classes’ backs to pay both shares”.

“It will most probably result in the elite and politically powerful avoiding taxes, as they have been doing for decades,” an economist claimed.

General Director of the Jordan Better Workplace Association Lana Nemiri named this avoidance of responsibility by the elite as “the middle class trap”, in which the middle class has “no other choice but to carry the burden for both the upper and lower classes”.

Director of the research centre at the Jordan Strategy Forum Ghassan Omet said “the law needs to widen its tax base to only include the wealthy 10 per cent of the nation, as other developed countries do. They have not adopted this system out of nothing, they chose it because it works”.

Friedrich Ebert’s President Tim Petschulat concluded, saying that “the law needs to generate income while leaving space for the economy to breathe and sponsor without burdening the middle and lower class further.”