Lowered sales tax on commodities draw mixed reactions

AMMAN — The government's recent decision to reduce sales tax on 61 commodities has drawn mixed reactions, with critics describing it as “ineffective” as it does not include most essential items, experts said.

Last Wednesday, the Cabinet decided to slash the general sales tax on 61 commodities down to 4 per cent from 10 and 16 per cent.

A statement by the Prime Ministry said that the move was meant to ease economic hardships on citizens and help balance the tax burdens.

The list includes foodstuffs such as canned meat, fish, cheese, pasta, vegetables, fruit, table salt and tomato paste, in addition to pencils, among others, according to the statement.

Jordan Chamber of Commerce President Nael Kabariti said that most of the commodities included in the decision are essential and consumed by all residents.

Kabriti praised the moving, yet called for revisiting the entire tax system in Jordan and reducing taxes on other basic goods.

“This measure to show off,” said Zayan Zawaneh, an economist, adding that it has nothing to do with easing the economic hardships on citizens with medium and low-incomes as it includes goods that people “can live without”.

Such a move proves that the government does not have a plan, underestimates people and that its priorities are different from those of the public, Zawaneh said.

The government's decisions serve the high-income segments only, he added.

Referring to the list of the commodities targeted by the decision, Amin Mahmoud, a resident, said that he has never heard of some the commodities such as duck luncheon.

“I do not care about most of these commodities, as I do not buy them on a regular basis,” he added.

A new controversial Income Tax Law went into effect at the beginning of the year, after it was promoted by the government as an answer to an unjust tax system.

Last year, the former government increased the general sales tax and scrapped a subsidy on bread as part of a three-year fiscal plan agreed with the International Monetary Fund, which aims to narrow a yawning budget gap and cut public debt exceeding $37 billion, equivalent to 94 per cent of the gross domestic product.

Wajdi Makhamreh, an economist, described the measure as a “good initiative”, adding that the government should do more to reduce the indirect taxes, especially after approving the new Income Tax Law.

The government has pledged to reduce indirect taxes down to an international standard, Makhamreh noted.

He added that basic commodities need to be targeted with tax reduction such as rice, sugar, dairy products, sesame paste and others to ease the tax burden.