For
more than fifteen years, the Jordanian economy has been trapped in a state of
chronic stagnation, primarily driven by weak domestic demand, which in turn
stems from limited household and institutional consumption. Insufficient
purchasing power among families and institutions undermines production,
constrains opportunities for economic growth, and leaves the country stuck in a
closed cycle of slowdown and high unemployment.
اضافة اعلان
As
discussions continue around the executive plan for the second phase of the
Economic Modernization Vision, it is worth emphasizing that among the practical
solutions long proposed to address this structural imbalance are policies to
raise wages and/or reduce the general sales tax on basic goods, as many
research institutions and economic experts have pointed out.
Such
steps could support local consumption and stimulate economic activity in the
short and medium term. Higher household incomes mean greater spending, which
directly boosts commercial and industrial activity while simultaneously
increasing government tax revenues from a strategic perspective.
However,
this strategic vision has been obstructed by several factors, foremost among
them the imbalance of social power, the influence of short-term interests on
economic policymaking, and the restrictions imposed by International Monetary
Fund (IMF) programs.
Raising
wage levels and/or reducing the general sales tax and excise taxes would not
merely be steps to improve citizens’ living standards, but effective tools to
increase aggregate domestic demand and drive economic growth forward. As
economic activity expands, more job opportunities will be created, contributing
to a reduction in unemployment, one of Jordan’s most pressing social
challenges.
Concerns
about rising inflation can be contained through available instruments, such as
stricter market monitoring on one hand and the activation of monetary policies,
including interest rate adjustments, on the other.
Moreover,
achieving tax justice is a fundamental entry point to stimulating the national
economy. Indirect taxes, particularly the general sales tax and excise taxes,
now account for about 72% of total tax revenues, placing a heavy burden on
citizens, especially low- and middle-income groups.
Conversely,
expanding efforts to combat tax evasion, particularly in the informal sector
and some professional sectors alongside supporting the effective implementation
of the electronic invoicing system, can generate additional revenues for the
treasury. These revenues could offset any reduction in indirect taxes and
provide the government with room to restructure the tax system in a more just
and efficient manner.
Combining
policies to raise wages and reduce indirect taxes, coupled with genuine fiscal
and administrative reforms, would create a dual impact: directly improving the
living conditions of Jordanian families while also reinforcing the trajectory
of sustainable economic growth.
This
balanced approach may well represent a realistic opportunity to lift the
economy out of its prolonged stagnation and set it on a more equitable and
efficient path, serving the interests of society as a whole.
