Removing the big hurdle

The Lower House of Parliament finally adopted the amended 2018 income tax law on Sunday after extensive debate and exchange of views with the government.

The endorsed new law is, therefore, the outcome of a series of compromises between deputies and the government by raising the level of the taxable income for families from JD18,000 as proposed by the government to JD20,000, and to JD10,000 for individual tax payers, instead of the JD9,000 as proposed by the government.

No matter what the merits or the demerits are of the adopted legislation, the fact that it was finally adopted is a blessing, having removed all uncertainties that existed till now. The main issue that remains is the collection of taxes, whether small or large, especially from corporations.

According to government sources, taxable income from families and individuals account for only 7 per cent of all collectible taxes, with the remaining taxes coming from companies. Now the new law goes to the Senate for endorsement, before it acquires the full force of law. Hopefully, now, the country can enjoy calmness in this regard. Hitherto, many people and companies had put their business plans on hold until they know where they stand under the tax law. Likewise, the government now knows with reasonable certainty how much tax they can collect from individuals and companies, and act accordingly.

Hopefully also, international monetary institutions, like the International Monetary Fund (IMF) and the World Bank (WB), will be content with the final shape and content of the income tax system in the country and act accordingly.

The government has repeatedly warned deputies that unless they approve a balanced income tax legislation, international financial institutions will not be forthcoming in extending loans to the country or stand by the country in times of financial need. With all fairness, such financial institutions were calling not only for increased taxes, but also for the reduction of government expenses. In other words, the responsibility towards the IMF and the WB lies not only with tax payers, but also with the ability of the government to cut down on waste, something that the government has not really done to the satisfaction of all sides.

Still, the adoption of the new tax code by the Lower House has removed a big hurdle facing the country, government and citizens alike. Now it is the turn of the Senate to approve the tax law as is, or amend it where it thinks will do more justice to tax payers and the government alike.