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Exemptions and reductions as corruption

Feb 18,2018 - Last updated at Feb 18,2018

Some strong groups have been able to impose on weak governments total or partial exemption of taxes. Treasury loss as a result is estimated to top JD3 billion a year, which goes to under-serving groups.

Prime Minister Hani Mulki admitted that most of these costly exemptions have not achieve the intended results. Production have not rise to boost exports and prices did not decline to benefit consumers. Effectively, exemptions became a sort of subsidy to under-serving parties, who were able to impose themselves on the government using their high voice and strong influence.

It was an integral part of the economic reform programme for exemptions and reductions to not to be allowed to go on if unjustified. The government is supposed to look into each individual case in order to put an end to tax exemptions when feasibility is not established.

I wish that the government cuts it short and puts an end to exemptions, leaving their beneficiaries dependent on themselves and their good management, like all successful and profitable concerns.

Let us face it, exemptions on certain activities is proof that they are unable to survive on their own. More than that, the International Monetary Fund suggested to treat the loss of revenue due to exemptions as current or capital expenditure and to be recorded as such.

It is no secret that the present government is against tax exemption and reduction on certain activities. Mulki promised to study each case and annul what is not economically justified.

The idea is that those who demand tax exemption or reduction should promise to boost production, especially exports, create jobs and reduce their prices.

If such objectives fail to be realised, then exemptions should not be allowed to cost some JD3 billion per year just to buy silence.

This is what justice, economic and social logic indicate, yet, some pressure groups are ready to make big noise to block such a badly-needed reform. We should not forget those who stand against this reform to prove their credentials. Opposing the government is, in itself, proof that such objections are seen as qualifications to please the agreed-crowd.

To stand against the government is seen as an act of bravery that creates popularity, as if the government is imposed upon by a foreign power against the will of the people.

The government is called upon to carry out its commitment in this respect. Tax exemptions are a waste of funds and contribute to budget deficit, rising public debt, and excessive dependence on borrowing or foreign grants, all of which run against the government’s slogan of self-dependence and puts the public finance on the right track.

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