AMMAN — Increase in state revenues should reflect
on economic growth in the country, experts argued, citing
Ministry of Finance figures which showed that revenues climbed by JD308.5 million to JD4.017
billion in the first half of the year.
اضافة اعلان
The experts urged the government to take serious
decisions that would contribute to raising the revenues further. They suggested
lowering energy costs and taxes on the energy sector, lowering interest rates,
and reconsidering an increase in social security percentages levied from
institutions and individuals.
“The increase in tax revenues came as a result of a
rise in
income tax revenues and profits by an amount of JD195.8 million, said
economist Husam Ayesh. He attributed the rise to the “success of the tax reform
measures taken by the Income and Sales Tax Department in combating tax evasion”
Other reasons, he added, was the “remarkable
recovery in the rates of economic activity that positively affected economic
growth rates”, he pointed out.
He said that “this increase in revenues is not
specifically an indication of improvement in the economic growth, but rather a result
of tax reform mechanisms”.
“Many of the international financial institutions,
such as the World Bank and the International Monetary Fund forecast that the
government will not be able to achieve the 2.07% growth rate envisaged in the
fiscal budget for 2022,” Ayesh told
Jordan News.
“Overall growth will be less than that”, he said.
“This means that the increase in revenues as indicated by the Director of
Income and Sales Department is due to better enforcement of the law, prevention
of tax evasion, and the additional revenues the government was able to
collect.”
On the other hand, he pointed out that total
spending increased during the first half of 2022 by JD328.8 million to JD4.946
billion, compared with JD4.617 billion in the same period of 2021.
He said the increased expenditure was partly due to
more spending on social protection, which increased by about JD100 million, and
this reflects the
government’s priority in expanding the social safety net and
directing support to those who deserve it.
Success of the tax reform measures taken by the Income and Sales Tax Department in combating tax evasion
“There is a need to control, improve and update
spending and remedy expenditures; in order to decrease the budget deficit
between revenues and expenditures,” he said. “It is unfathomable that the
government works on improving the revenue generating tools and mechanisms while
there is not a tangible and announced procedures and mechanisms to reduce and
control expenditures and prevent expenditure squandering.”
Ayesh stressed that “It would not be unsustainable
to rely on tax reform revenues, or increasing taxes to fill the gap in
indebtedness between the revenues and the expenditures.”
“The will to improve must be present on both sides
of the equation: Improving and increasing revenues, controlling and reducing
expenditures, and preventing public expenditure squandering in order to
regulate the financial operation in Jordan.”
Financial Analyst Mazen Irsheid said more than half
of the revenues recorded between January and June this year is owed to company
profits, specifically those in the mining sector, which contributed JD170
million of total domestic revenues.
He cautioned that the increased revenues from the
mining sector could be a one-shot in the arm, noting that they “are not
sustainable streams of revenues in the long-term.” He explained that the global
focus on food security and agriculture generated a significant demand on
Jordanian fertilizers.
He recommended that “in addition to the government’s
success in implementing tax reform mechanisms, we hope that the implementation
of mechanisms to combat tax evasion continues, thus securing more revenues to
the treasury,” he said.
Economic researcher
Mohammad Al-Bashir said “an
important factor which contributed to the increase in domestic revenues,
whether tax-related or non-tax related, is the rise in GDP.”
In addition to the government’s success in implementing tax reform mechanisms, we hope that the implementation of mechanisms to combat tax evasion continues, thus securing more revenues to the treasury
He said that an increase in imports meant custom
proceeds contributing to tax proceeds. “There is also a 104 percent increase in
intra-Arab trades which also confirm there are customs being paid on imports.”
“When we
speak about tax increase, I say yes to increases on income tax and no to an
increase in sales taxes because it limits consumption, prevents optimal
operations of production lines, does not help with achieving growth rates which
the government aspires for, does not support breaking the gap between imports
and exports, and that is clearly reflected in the deficit in the trade
balance,” he explained.
On a perspective of how to remedy the fiscal
contractions, Bashir said that this can be done through “lowering sales tax and
increasing income tax, especially on the wealthy, not the middle income
individuals.”
“The tax must be increased on high income brackets
and on companies with high profit margins,” he said. “At the same time,
lowering sales tax on energy derivatives and energy prices for exports is a
must too.”
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