No one can say that tax reform carried out under the most
recent law, which went into effect in early 2019 in early 2019, has met its
objectives as the entirety of the taxation system is still plagued by
deformities.
اضافة اعلان
It is hard to believe that more than 50 percent of sales tax
revenue — amounting to more than JD3.82 billion — are derived primarily from
two products: cigarettes and fossil fuels, which alone contribute over JD2.2
billion.
It is also hard to believe that 70 percent of income tax
revenue, estimated at JD1.11 billion in 2021, come in from 38 major companies.
The government cannot heal the taxation system’s ailments
overnight simply because the matter is far too complex. But under the new taxation law, most
companies are now required to pay tax.
Despite major complaints about hikes in sales and income
taxes on both citizens and companies, there remains a total of 340 foodstuff
commodities that are either exempt from tax or subject to tax rates below 4
percent.
The presence of the list in its current form blocks official
considerations of a unified sales tax rate on all goods. Because the notion
that sales tax on all goods and services could be fixed at, say, 10 percent or
12 percent, simply means that any tax-exempt commodities would cease to be so,
and any of those that were subject to low tax rates would see a considerable
hike.
Such action would be a harsh blow to those with low to
average income, which would result in a major spike in prices.
On the other hand, the prices of non-essential goods and
services would drop significantly, based on the disproportionate decrease in
sales tax rates form the current 16 percent, which essentially rewards the
wealthy, in a move that is counterproductive to achieving social justice.
Tax reform in Jordan is not easy as some might think or
demand, especially among those who compare the Kingdom’s taxation system to its
counterparts in Arab Gulf countries. In
Jordan, the situation is completely
different as the Kingdom has historically subsidized a large number of
commodities and services covered by an existing taxation system, largely
responsible for defeat.
Therefore, any amendments, including tax tariffs must
account for the protection of social segments that rely heavily on exempted
goods or goods with 0-percent tax rates to make up for the subsidies previously
granted by the Treasury on these commodities.
The new taxation law is more inclusive than it once was,
covering all those whose monthly wages are higher than JD800. But the most
important amendment to the law is that it covers certain occupations, like
doctors and lawyers who have more nuanced ways of making their income.
The government may need to reconsider tax rates on certain
sectors, whether its income or sales tax. These sectors include the tourism,
transport and other sectors, which would become more protected and rejuvenated.
Overall reform is not easy and any amendments or changes
must be gradual, and must follow the institutionalization of current tax
reform, particularly in areas of tax evasion, along with administrative
development in the structure of the Income and Sales Tax Department.
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