Jordan Times
Monday, March 29, 2004
House approves 3% increase on sales tax
By Sahar Aloul
AMMAN — The Lower House endorsed a three per cent
increase on the sales tax Sunday bringing it from 13 to 16 per cent as part of a
government-imposed price and tax hike package negotiated with lawmakers earlier
this year.
The endorsement comes three days before the closing of the first ordinary
session of the 14th Parliament by a Royal Decree.
Apart from a few independent deputies and the Islamic Action Front (IAF) bloc,
the political arm of the Muslim Brotherhood and the country's main opposition
party, the majority of the 94 deputies present during the morning session
approved the amended General Tax Law.
The law, which was presented to the House last week by the government, is part
and parcel of a price and tax hike package introduced by the government in
January to "rein in the budget deficit within the International Monetary Fund
approved limits of JD293 million."
The price hike package initially included a four to six per cent increase in the
general sales tax on 91 goods, in addition to a six per cent sales tax on
tobacco, alcohol and mobile telecommunication bills, and an increase in the
prices of oil derivatives by an average nine per cent.
Lawmakers had earlier rejected the price hikes during a public session but
changed their minds during the state budget vote after a series of negotiations
with the government.
Prime Minister Faisal Fayez had earlier promised deputies that he would increase
the salaries of civil servants and military personnel and scrapped earlier plans
to slap on extra taxes on basic commodities including medicine, food and
schooling material in order to secure House approval of the JD2.67 billion 2004
budget.
Moreover, Fayez approved decreasing the sales tax hike from four to three per
cent to reach common ground with the lawmakers. Discussions over the law took
the spotlight at Sunday's session as Islamists and a few other independent MPs
tried to persuade deputies to reject the law outright.
"Increasing the sales tax will put an extra burden on some 47 per cent of
citizens who will not benefit from the salary increase proposed by the
government to offset these hikes," IAF MP Zuhair Abul Ragheb (Amman, 3rd
District) said.
Salary increases approved by the government are expected to affect public sector
employees and retirees as well as military personnel. A JD10 raise will be given
to employees whose monthly paycheques are below JD200, and JD5 to those with
salaries between JD200 and JD300.
Finance Minister Mohammad Abu Hammour said the law will introduce new financial
resources for the treasury through which the salary increase, projected to
burden the budget with an additional 60 per cent expenditure, can be realised.
Moreover, he said, His Majesty King Abdullah's directives to include children
below the age of six under an expanded free health insurance umbrella, which
will incur an extra 15 per cent cost on the budget, will also be offset by the
three per cent increase in the sales tax.
The new 16 per cent sales tax is expected to pump an extra JD70 million a year
into the state coffers.
The prime minister also explained to the House that funds for the National Aid
Fund would soon be increased so that the NAF may provide assistance to a total
of 80,000 families.
Earlier during the session, House Speaker Abdul Hadi Majali referred to what he
described as "regretful incidents" during the Wihdat Camp demonstration after
Friday prayers over the Israeli assassination of Hamas leader Sheikh Ahmed
Yassin.
"The incidents which we completely reject include the destruction of private
property and the burning of the Jordanian flag as well as an assault on MP
Tayseer Fityani," Majali told deputies and Cabinet officials during the session.
According to Fityani, he was assaulted and beaten by security officers while
"trying to restore calm to the demonstration" which was conducted without prior
approval of the authorities.
The House left investigations into the Wihdat incidents to the speakership.
Two laws were also presented to the chamber: The Protection of National Produce
Law which was amended and approved by the Senate, and the Orphans Fund Law,
which was returned to the House by the Senate and thus referred to the Financial
Committee.
The legislature later started debates on the Financial Disclosure Law, but they
were interrupted by a sudden breakdown in the Chamber's sound system, postponing
the session till Wednesday morning.