Jordan Sales Tax Increase Receives Mixed Response

by Lorys Charalambous, Tax-News.com, Cyprus

21 November 2001

The Jordan Times has reported that the government's decision to widen the general sales tax base (GST) by increasing taxes on merchants and tradesmen has received a mixed response. The proposal to increase the GST is expected to take effect some time next year when merchants with an annual turnover of at least JD 150,000 will become subject to the tax; currently it applies to a turnover of JD 250,000 or above. It is believed that the amendment will affect a further 3,000 merchants and will result in an extra JD 10 million in revenue for the government.

'It is wrong timing. Merchants are already suffering from economic slowdown. The step means hiking prices which will negatively affect our business ... merchants will have to keep books of their purchases and sales, and place a price tag on each item,' said member of the Amman Chamber of Commerce Fathi Sughayer who feared that this will subject merchants to fines.

Another chamber member, Nayif Qasrawi, has called for a delay in the introduction of the amendment until the end of next year at least. 'Regardless of my own viewpoint, imposing the tax at this difficult time is simply incorrect,' he said.

However, Yousif Sukkar, director general of Al Ahlia Superstore, praised the amendment because it was a step in the right direction towards achieving equality among merchants. 'There should be no distinction in levying the tax within the same sector or among the various sectors. Registration limits should be lowered to less than JD150,000 so that all sectors pay the same,' said Sukkar.

Economist Yusuf Mansur complained to the Jordan Times over the timing of the government's decision which coincides with the launch of a new plan designed to boost the economy. Mansur explained: 'The goal of the plan is to increase the income of the average citizen, but the tax will decrease the available income of these citizens, reduce their purchasing power, and suppress demand. The tax runs counter to the plan. In all textbooks, it is stated that increasing taxes reduce economic activity.'

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