AMMAN —
Prime Minister
Bisher Al-Khasawneh’s announcement Sunday that there will be a
restructuring of Jordan’s custom duty regime has taken Jordanians by surprise
including most economic experts. Previously, there have been 11 categories
pertaining to local custom duties, and Khasawneh stated that these categories
will be reduced to four down from 11.
اضافة اعلان
There was no
mention of such sweeping restructuring before by this government. The aim, the
prime minister said is to streamline the process of clearing at borders,
empower consumers and prevent corruption.
Jordan News asked local
economists about their reaction.
According to the
prime minister, the decision to reform custom tariffs through a reduction of
the rates will have a beneficial effect on local suppliers and merchants, and
that it will also ease their business operations due to a reduction in overall
costs and time. Khasawneh also highlighted that such a measure will lead to an
improvement in the local purchasing power by consumers, due to the impact of
lower prices.
Jordanian
economist
Mazen Irshaid told
Jordan News that while he is not fully
aware of the extensive details surrounding the new measures, he feels that a
more elaborate explanation on the new reforms is needed to better understand
their impact. “The announcement was clear, but I feel that it would be helpful
for economists to know how much the average rate of custom duties for all goods
and commodities was before these reforms and what the average will be now with
these new measures. More details about this would be rather informative for
analysts.”
“It is entirely
possible that the average custom duty rate for all imported goods before these
reforms (when the range was between zero and 40 percent range) was,
hypothetically, 18 percent, and that now, after these reforms have reduced the
range to become between 0 to 25 percent, the average custom duties rate for all
goods could actually be 20 percent, which would indicate that the average rate
would be higher after the introduction of these reforms, compared to before
their introduction. Of course, we do not know if this is actually the case, but
this is why it is very helpful to know about the average custom duty rate for
all goods, both before and after these reforms,” Irshaid said.
It is difficult to
determine if these new economic measures are truly a positive step for Jordan
without acquiring more data on the average rate of custom duty for all goods of
last year and this year, Irshaid added. He also said that these tariffs are
almost always paid by consumers and businesses.
Economic expert
Wajdi Makhamreh told
Jordan News that such economic measures are usually
discussed with the
Ministry of Finance and that the true impact of these
measures will need to be studied before rushing to conclusions, adding that
such studies will likely “take between six months to a whole year”. He also said:
“It is worth asking if the government has consulted the appropriate
stakeholders related to the Jordanian import industry before taking such
measures.”
If tariffs were to
increase in the future, the main beneficiary of such an increase would mainly
be the government, Makhamreh said, because tariffs are a type of revenue that
is generated by the government. “Since a reduction of the custom duty rate on
imported goods could possibly lead to a decrease in revenue for the government,
this should lead us to ask about whether or not the government will find
alternative ways to compensate for this potential loss in revenue.”
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