Economists urge government to reduce taxes to help economy recover

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AMMAN — The national economy registered a slight improvement this year, compared to 2020, which was “exceptional and unprecedented”, but high taxes continue to be a burden on boththe productive sector and the citizens, and thus a hindrance to more robust recovery, economist interviewed by Jordan News assert.اضافة اعلان

According to official government figures, local revenues rose until the end of October of this year by about JD963.1 million, or 17.8 percent over to the same period last year, while the unemployment rate in the Kingdom decreased during the third quarter of 2021 by 1.6 percent, compared to the second quarter of the year.

The GDP at constant market prices grew in the second quarter of 2021 by 3.2 percent, while the value of total exports increased during the first nine months of this year to reach JD4.719 billion.

Tourism income increased by the end of November by 78.5 percent, to reach $2.4 billion, due to a considerable increase in the number of tourists; 2.109 million tourists visited Jordan till the end of November this year. December, however, witnessed huge cancellations due to the pandemic, and that is bound to offset the increase so far.

Economist Mohammad Al-Basheer said that Jordan has been suffering from economic woes since well before the COVID-19 pandemic, “the most prominent of which being the lack of proper management of the economic files and failure to give significant importance to the industrial and agricultural sectors”.

Basheer told Jordan News that the rise in national debt and in taxes affects negatively the industrial sector and that “the main cause of the financial problems is still the taxation system followed in Jordan”.

A cut in taxes “is surely needed”, he said, to help the productive sectors and alleviate the burden on citizens.

Mufleh Aqel, another economy expert, told Jordan News that the national economy improved in 2021, but the upturn did not significantly affect the GDP, adding that a tax reduction would increase the purchasing power of citizens, which, in turn, is bound to have a positive impact on the GDP.

Economist Husam Ayesh told Jordan News that this year’s economic indicators are positive compared to last year’s, which was “exceptional worldwide”, adding that Jordan’s economic downturn is the lowest among Arab countries and the country is witnessing a slight economic growth, not enough, however, to “provide economic security and lift the national economy”.

“One of the main reasonsis the tax burden,” he said, wondering why “the government insists on following this approach, although it strains the economic process and weakens the investment opportunities”.

Economist and former minister of state for economic affairs Yusuf Mansur said any analysis of the economic performance this year compared to last has to take into consideration the fact that last year was a year of decline, and therefore,“any improvement will be tangible compared to 2020”.

As such, he said comparisons should be measured against normal years, such as 2015, 2016, 2019 and others, as, in comparison with “a miserable year such as 2020, anything would seem better”.

Mansur disagreed that unemployment levels decreased, affirming that it“actually increased compared to 2019, for example”.

As for increase in taxes, Mansur said the “government expenditure does not encourage development and investment, it is only focused on salaries and retirement, and when expenditures exceed imports, the government is forced to raise taxes”.

To address this vexing issue, he believes “the government should be bold in taking new and serious decisions”.

“The government has two approaches, either deflationary policies, through which it will reduce expenditures and raise taxes, or create major projects that provide job opportunities for the youth; when the productivity increases, the income also increases. When the people become rich, the government becomes rich,” he said.

In order to revive the economy, he said, the country “must come up with strategic plans and learn how to deal with the distortions that were created by 2020, otherwise, this will inevitably affect the economy later on.”

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