Jordan Times
Wednesday, January 21, 2004

'Government has to find common ground with lawmakers to apply reforms'

By Sahar Aloul

Although the legislature's vote was not mandatory, it clearly indicated sensitivities lawmakers have towards the state budget, built on swelled prices and new tax hikes.

“The government is morally obligated by the House's decision, which directly reflects the people's will,” Islamic Action Front MP Ali Abul Sukkar told The Jordan Times.

Abul Sukkar, first assistant to the House speaker, said the government could choose to ignore the vote, but the House ultimately has the right to give or withdraw confidence from the executive authority.

Forty-five out of 67 deputies voted against Prime Minister Faisal Fayez's proposals to raise the prices of fuel derivatives by an average of 9 per cent, and increase sales tax from 13 to 16 per cent and General Sales Tax on a few items from 4 to 6 per cent. A six per cent sales tax will also be imposed on tobacco and alcohol and an undisclosed sales tax on mobile telecommunication bills.

Fayez's decision to involve deputies seems to have been a “tactical mistake” on his part, prominent economist Fahed Fanek said, adding that the prime minister now has to wait longer before raising this topic again.

“He [the premier] should not have gone to the House to endorse a decision that is within his own authority to begin with,” Fanek said, “he should have left it for endorsement through the budget.”

Moreover, Fanek believes Fayez should have informally secured approval from lawmakers on the hikes ahead of his public declaration.

“It seems that the prime minister thought he would succeed in persuading deputies on the reasons for the hikes when he made his speech,” the analyst said.

MP Mamdouh Abbadi (Amman, 3rd district), former minister and Amman mayor, agreed, saying that the House is well aware of the government's predicament, but insisted that the Cabinet should have conferred with the deputies before declaring their intentions.

According to Fayez, these measures are designed to correct economic imbalances, particularly the budget deficit, projected at JD316 million for 2003.

The loss of the JD300 million Iraqi oil grant, the sharp drop in exports to Baghdad and the JD72 million subsidy on fuel derivatives dealt a heavy blow to the delicate economic balance Jordan has maintained over the years.

The premier tried to reassure the legislature that his government will offset the price hikes by increasing salaries of civil servants and government and military retirees. But deputies seemed more inclined to listen to their constituents.

“This price hike is a ticking time bomb waiting to go off,” Abbadi said, adding that citizens will not be able to cope with such an issue.

Imposing higher taxes on the rich and lucrative banking sectors, cutting down on capital expenditure as well as funds for the Socio-Economic Transformation Plan were a few of the alternatives Abbadi suggested.

The price of a butane gas cylinder is slated to rise by half a dinar, a litre of regular and super gasoline by 25 fils and a litre of kerosene and diesel by 10 fils.

Salary increases will only apply to public sector employees and civil and military retirees — those whose monthly salaries do not exceed JD200 will receive a raise of JD10, and those who earn between JD200 and JD300 will receive a JD5 raise.

Deputies and economic analysts, however, do not believe the salary increase will compensate for the new price and tax hikes.

“Over two-thirds of our workforce are private sector employees, how does the government plan to compensate them for instance,” questioned Abul Sukkar.

The state budget seems to be the next victim as deputies are leaning increasingly towards rejecting the budget in its current form.

Some 40 deputies so far were reportedly opposed the state budget including Abbadi's 11-member Democratic Alliance bloc, who announced on Tuesday they will vote down the proposed budget if the government does not back down on its decision to raise prices.

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