Special – Compass

The recent statements of Finance Minister Muhammad al-Issis, about the sales tax’s retroactivity and Jordan’s non-dependency on the International Monetary Fund and the World Bank, reopened the tax file and the major distortions in it and the need to conduct a comprehensive review of this file and its effects on the national economy and growth that has reached the point of stagnation since 2009 until today.

Observers called on the government to hold a conference to reform the national economy and to invite the elite of economists, thinkers, analysts and people with national expertise to present the most effective visions and solutions to get our national economy out of the impasse in which it has fallen due to the policies of successive governments that still believe that the solution to the crisis is constantly tax collection and extending a hand in the pockets of citizens. Which has proven to be a failure over the past years and contributed to consolidating the state of economic failure that Jordan is experiencing.

Obstruction of the horizon

In his statements to Al-Basala, the economic expert, Fahmy Al-Katout, expressed his lack of optimism about finding any solutions to the financial and economic crisis in Jordan as long as successive governments follow the same approach. He stressed that the crisis has reached the point of “clogged horizon”.

Al-Katout said: If the approach and policies do not change, there are no prospects for achieving economic development or growth, and we refer to the sales tax as a deflationary tax that has a function that affects the purchasing power of citizens and at the same time affects the decline in economic growth.

However, he added: Therefore, the tax policy must be restructured so that the progressive tax mentioned in Article 111 of the Jordanian Constitution becomes the basic tax in the country.

He explained that the income tax is the tax that is imposed on profits and by which the economy is stimulated and the treasury revenues are stimulated from taxes, adding: While the sales tax has nothing to do with stimulating the economy and economic development, it is rather a random tax collection process in a manner that is equal among all social strata and in the same proportion. Therefore, this tax significantly affected economic growth.

He stressed that the Jordanian economy has stopped growing since 2009, when the growth rate was 5%, after which it began to achieve no growth, and the index went down to 3% and then continued to decline until it reached stagnation and a growth rate of zero percent.

He pointed out that one of the main reasons for the slowdown and stagnant growth was the sales tax, as a tax on production inputs, which had a very serious impact.

The special tax is also ‘more regressive’

Economist Fahmy al-Katout said that the sales tax is not the only reactionary, reminding the Minister of Finance that the “special tax” is more regressive, more dangerous, and has an impact on the national economy, especially those imposed on hydrocarbons at a rate of more than one hundred percent.

He stressed that we have to think about how to benefit from stimulating the economy, and not through tax collection, because it will lead to positive results in treasury revenues and increase these revenues.

Al-Katout stressed the futility of government policies that believe that tax collection solves the Jordanian economy crisis. Taxes, especially sales tax, because they are the easiest method of collection, while in the current reality there is no country in the world that imposes a sales tax of 16%, and if any, these countries have other incentives for the economy. , but it is very limited.

He noted that the global capitalist system often relies on a progressive income tax, and therefore this means that you have to stimulate the economy so that there is income for citizens and investors, and this ultimately benefits the treasury.

Is Jordan a hostage to the IMF?

The economist deplored the statements of the Minister of Finance, in which he spoke about Jordan’s non-dependence of the International Monetary Fund and the World Bank, as a coup in the way of thinking, but it has nothing to do with the content on the way of media distortion, and that it comes at its time with a direct link and talk about reconsidering tax policy.

Al-Katout added, this is not true and not accurate, as the financial policies in Jordan are directly related to the policies of the International Monetary Fund, and there are signed agreements that are still prevalent for years to come. On the reality of the Jordanian economy.

However, he added: Because in the end, when the government and the Ministry of Planning go to obtain external loans from the global markets, Eurobond and others, the latest reports of the International Monetary Fund and the World Bank must be reviewed to know the reality of the Jordanian economy, in addition to that they receive American support and what is known as an American guarantee to obtain such These loans, saying that Jordan is not subject to the fund is incorrect, and Jordan is subject to these international institutions.

A national economic conference to correct the course

In his statements to Al-Basala, the economic expert, Fahmy Al-Katout stressed that if there is a will to reform the Jordanian economy, an open dialogue must take place with all economic trends in Jordan and the multiple and sometimes divergent ideas to talk about this reality, regardless of the way this opinion is thought or That is, the important thing is how it can be directed towards stimulating the economy and getting it out of its crisis. This is necessary, but if there is seriousness in this aspect.

Al-Katout said: But until this moment, I notice that governments are talking to themselves on the issue of the economy and not talking to experts.

He added, “Unfortunately, the reality of the Jordanian economy should have been reviewed and solutions developed more than seven years ago, one or two years after the decline in growth and slowdown reached the point of stagnation.”

He stressed that there was supposed to be a pause, review, holding a national economic conference, presenting papers and discussing them from all economic trends, all thinkers and all economic writers concerned with the Jordanian economic reality, and more than that, hosting well-known Arab economic figures to express their opinion on this subject, because it would be very useful To get our country out of this crisis.

Al-Issis: The sales tax is unfair and regressive

Finance Minister Muhammad Al-Ississ confirmed that the government has monitored all MPs’ comments on the 2022 budget, and will take them into consideration.

Al-Ississ added, in his speech during a meeting of the Parliamentary Finance Committee, last Wednesday, that the 2022 budget is not traditional, as capital spending has been raised to unprecedented levels.

He explained that the financial situation is not easy, but there is no alternative to creating job opportunities and achieving growth during 2022.

Al-Issis pointed out that the sales tax does not equate to the level of income, and it is unfair and regressive. Therefore, customs duties on various foodstuffs and others have been reduced, in a manner that does not negatively affect public finances.

(compass)