Prices of clothes expected to drop

3. Clothes
An undated photo of a clothing shop in Amman. (File photo: Ameer Khalifeh/Jordan News)
AMMAN — Traders in the clothing sector interviewed by Jordan News agreed that a government decision to lower the sales tax would have a significant positive effect on the sector, which has been witnessing stagnation since the onset of the COVID-19 pandemic, and even before that.اضافة اعلان

President of the Textile and Readymade Clothes Syndicate Sultan Allan told Jordan News that the current sales tax is a big obstacle to the recovery of the sector and called for a quick decision on the issue of reducing the tax, “as this has an immediate and significant impact on the recovery of the economy and on reviving the commercial sector”.

Allan said that the government “should take an immediate decision to reduce the tax to 8 percent and see how things work, or it can begin with a gradual reduction too; let the sales tax be 12 percent, then 8 percent, in order for the government to have the opportunity to study the economic situation after the reduction and the extent to which this decision impacts the purchasing power of citizens.”

He added that a lower sales tax will have an even greater impact than the lower customs tariff, adding that it is still early to tell whether the prices of clothes have decreased after the reduction of customs tariff, but that “it is expected that they would be reduced by 3–5 percent. I agree with this expectation, but there are several other determinants, including the removal of price ceilings for clothing”.

“We are used to stagnation in the periods between summer and winter every year, but the stagnation the sector is going through this year is even greater than in the past years,” Allan said.

“Traders face too many challenges, such as employee salaries, rent and bills. An increase in taxes or fees will make them raise their prices too,” he added.

Representative of the clothing sector at the Jordan Chamber of Commerce Asaad Qawasmi told Jordan News that the removal of price ceilings for clothing will negatively impact the clothes price and contribute to minimizing the effect of lower customs tariff, but still, “it is expected that prices would decrease a little due to the fact that there is strong competition among traders and that the citizens’ purchasing power has decreased”.

Qawasmi stressed that traders need the government to reduce the sales tax, which “would have a positive impact on both traders and customers”.

President of the Textile and Readymade Clothes Syndicate Munir Deyye said the prices of clothes are going to be reduced “by 5–10 percent only” because of the many global developments, including the rise in the prices of raw materials and shipping fees, “besides the expected impact of the removal of the price ceiling”.

Deyye said the government should reduce the sales tax, a move that would “inject liquidity into the economy”.

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