Questions and Answers regarding Jordan’s protests and possible scenarios

Questions and Answers regarding Jordan’s protests and possible scenarios
Questions and Answers regarding Jordan’s protests and possible scenarios
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Question: Which sector will be the most hurt by the new income tax law?

Answer: those with individual salaries of less than 8,000 JD and families with 16,000 JD will not be affected directly. The Income tax bureau has created an app where people can go to it and see what their tax burden would be.

Question: Is it possible that those affected will pass on their tax increase to consumers and people who are affected by their work?

Answer: this is possible, but it is not automatic the way it is if fuel prices rise and the cost of products are affected because of transportation. The increase for example of the tax burden to doctors will not necessarily increase the doctor’s fees which is set by the Doctors Professional Association (which many feel doctors are bypassing it). The only way that this will increase officially will be if the Doctors Association issues new price lists for doctors and so on.

Question: Will every citizen have to register with the tax department now?

Answer: The new law will provide a tax number to every citizen upon reaching the age of 18 but a citizen will only have to file his or her taxes if they bypass the minimum annual amount listed above.

Questions: will the new law negatively affect Jordan’s economy:

Answer: The economy is affected by a whole host of local, regional and international factors. If for example the borders with Iraq and Syria open this will revive the economy regardless of this new tax.

 Question: Can Jordan reject the conditions set by the International Monetary Fund?

Answer: The IMF doesn’t put any conditions. These are commitments made by the Jordanian government for which the IMF has agreed to.

Question: are these IMF inspired conditions hurtful to the Jordanian economy?

Answer: Jordan is the one who went to the IMF asking for a loan with comfortable conditions. The IMF asks any country that asks for a loan to be clear about its future economic plans and how it plans to pay back. Therefore, the Jordanian commitment to widen the sector of individuals paying income tax was accepted. Naturally Jordan can retract its commitment, and, in this case, it must come up with an alternative plan and who will this affect?

Question: What alternatives can Jordanian government present?

Answer: It is difficult at this late stage for Jordan to make a major change of direction because as the Prime Minister said Jordan has already completed 70% of its commitments and the last portion of its commitment is the current tax reform. Jordan as the Prime Minister said is committed to a modern tax law that protects the poor and the middle class. Of course, the government can cut expenses, reduce the cost of running various government and security sectors, the royal court and to review various items in the general budget and if it does that it might not need a load from the IMF.

Question: Why is the government so insistent to present this draft law to parliament even though over 80 MPs (out of 130) have signed a petition that they will reject this draft law if presented to them?

Answer: The reality and from historical experiences, the petitions of MPs are not necessarily a sign of their ultimate decision especially if the draft law is changed before a vote is taken.

Question: What if the lower house of parliament does reject the tax law?

Answer: it will go the upper house, the senate for a vote by them. The senate is made up of half the number of the lower house, i.e. 65.

Question: what if the senate agrees to discuss the law?

Answer: The constitution states that if the two houses disagree on a bill a joint session is held headed by the speaker of the Senate and its decisions must be taken with 2/3 of those attending.

Question: What if the Senate rejects the law also?

Answer: in this case this will be the failure of the Hani Mulqi government and he would most likely submit his resignation. As to the IMF, the new government will have to revisit their talks after some internal discussions and public debate.

Question: If the law fails what are the options available to the government?

Answer: Budgets are made up of revenues and expenses. If they are not equal one has to increase or the other decrease. The government could increaser say the customs (even though some say it is already high) or the sale tax (at 16% it is also high) or find other revenue streams. The government can also rewrite the tax law in such a way as to avoid the burden on certain sectors that are hurting and are protesting but then it will affect other sectors.

Question: what about reducing the expenses?

Answer: As to expenses the options are limited since most of the expenses are in salaries and retirement payments and other operating costs, while the development and investments are expected to accelerate the economy so cutting them will reduce the chance of an economic improvement.

Question: are we then in a bind regardless of what the government of parliament decide?

Answer: yes and no. The government needs to understand that the issue affects the entire nation and it can’t act in isolation on an issue that affects so many sectors of society and that is why it is facing problems with the people, the unions, the parties, civil society and the parliament. What is needed are agreed to solutions that include cost cutting and agreement on consensus issues in the current draft law such as cutting on tax evasion and punishing those who attempt to defraud the treasury. But such agreements need to be done after much discussion and debate with the government being transparent and listening to all sectors of society.

Question: Why doesn’t the government do that before unilaterally proposing such a controversial law?

Answer: the government has detailed information about the state of the economy in Jordan that it has chosen not to share with the public while saying it wants to avoid hurting the poor and increasing the burden on the middle and upper class of society in a gradual way as mandated by article 111 of the constitution.

 Question: Where does civil society come in?

Answer: Many consider that parties, professional unions are part of civil society. But regardless of the names, the current government of Hani Mulqi has ignored civil society in all its formats and has attempted to railroad a controversial tax law without any discussion with parties, unions and other civil society activists. The coalition of 13 civil society organizations HIMAM asked repeatedly to meet with the prime minister Hani Mulqi but he never found time to meet with civil society organizations and the ultimate result is what we see now.

Question: So, what is the solution?

Answer: Some believe that the issue has gone beyond a law and it might require the King to intervene to take the hard decision.

Question: What is the problem with the King decision after all he is the head of state?

Answer: The King tries to avoid taking decisions that will be controversial and prefers that the government, the parliament and the people find a solution because such an agreed to solution will be sustained. A bad decision will deplete the King’s credit with the people. After his meeting with the top leaders the king said that it is not fair that the public take all the burden and called on the government o be more efficient in its use of public funds especially in areas like health, education and transport Of course if the situation is an emergency the King will have no choice but to decide.

Question: Isn’t the current situation an emergency?

 Answer: yes and no. The current law which is supposed to take effect January 1st, 2019 has not gotten enough public discussion. If he considers the situation an emergency and decides to withdraw the law, he will have to come up with an alternative plan/

Question: isn’t a new government an alternative?

Answer: as the protestors keep saying what is needed is not a personnel change but a policy change. Changing Mulqi will not necessarily solve the problem. What is needed is a true partnership with all sectors of society, a serious, honest and transparent discussion that is void of personal interview and a willingness of all to make the needed sacrifices for the public good.


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