Jordan approves new IMF-backed tax law after introducing changes

Jordan’s Prime Minister Omar al Razzaz said on Sunday the kingdom will pay a heavy price if parliament fails to approve new IMF-backed tax legislation. (File photo / Reuters)
Updated 18 November 2018
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Jordan approves new IMF-backed tax law after introducing changes

AMMAN: Jordan’s lower house of parliament approved a new IMF-backed tax law on Sunday after introducing some changes in a move to help the cash-strapped economy move ahead with crucial fiscal reforms to ease record public debt.
A majority of deputies in the chamber approved a series of amendments in the 36-article bill that include raising family exemptions to mitigate any impact on middle class income earners.
The bill will still need to go to the upper house or senate for approval before it is enacted as law. It is expected to be effective early next year, officials said.
Earlier on Sunday, Jordan’s Prime Minister Omar al Razzaz said the Kingdom will pay a heavy price if parliament failed to approve new IMF-backed tax legislation.
Razzaz told deputies who were debating the legislation that failure to approve the bill would mean the Kingdom would have to pay even higher interest rates on its substantial foreign debt.
Razzaz said the law promotes social justice by targeting the wealthy and combats long-time corporate tax evaders, but opposition deputies argue it will hurt the already stagnant economy and diminish middle-class incomes.
“The individuals who will be affected are the top 12 percent income earners, it won’t affect middle and low income earners,” Razzaz told deputies.
The government sent the bill to parliament in September after withdrawing an earlier draft submitted by a previous government that triggered protests over the summer.
Earlier this year, Jordan increased a general sales tax and scrapped a subsidy on bread as part of a three-year fiscal plan agreed with the International Monetary Fund, which aims to cut public debt of $37 billion, equivalent to 95 percent of gross domestic product.
The debt is at least in part due to successive governments adopting an expansionist fiscal policy characterized by job creation in the bloated public sector, and by lavish subsidies for bread and other staple goods.
Rejection of the tax legislation would push even higher the cost of servicing over 1 billion dinars ($1.4 billion) of foreign debt due in 2019, raising the prospect of rating agencies downgrading Jordan’s credit ratings, Razzaz said.
“We will pay a heavy price if we don’t approve this law,” he said.
The government has also echoed IMF concerns that without these reforms public external debt will spiral.
Debt service would peak in 2019-2020 at about 6.5 percent of GDP with the Eurobonds that will be due.
The country’s economic growth has been hit in the last few years by high unemployment and regional conflict weighing on investor sentiment and as demand generated from Syrian refugee receded, according to the IMF.
Economists said Jordan’s ability to maintain a costly subsidy system and a large state bureaucracy was increasingly untenable in the absence of large foreign capital inflows or injections of foreign aid, which have dwindled as the Syrian crisis has gone on.


Work underway to clear land mines from Jesus baptism site

Updated 10 December 2018
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Work underway to clear land mines from Jesus baptism site

  • Work at the site just north of the Dead Sea is being overseen by Israel’s Defense Ministry
  • Mines and other ordnance have been cleared from Ethiopian and Greek Orthodox monastery sites, organizers said

QASR AL-YAHUD, Palestinian Territories: Efforts to clear thousands of land mines and other ordnance around the site where many believe Jesus was baptized have reached a milestone and officials allowed a rare glimpse Sunday of abandoned churches there.

The church grounds around the site in the occupied West Bank have sat empty and decaying for around 50 years, though pilgrims have been able to visit a nearby restricted area at the traditional baptismal spot on the banks of the River Jordan.

Work at the site just north of the Dead Sea is being overseen by Israel’s Defense Ministry, de-mining charity Halo Trust and Israeli firm 4CI.

According to the ministry, the project covers around 1 square kilometer (250 acres) as well as some 3,000 mines and other explosive remnants.

It is expected to cost 20 million shekels ($5.3 million, €4.7 million).

The work began in March and would require another eight months to a year to complete, said Moshe Hilman of Israel’s Defense Ministry.

Mines and other ordnance have been cleared from Ethiopian and Greek Orthodox monastery sites as well as a Franciscan chapel, organizers said.

Other grounds belonging to Russian, Syrian, Romanian and Coptic Orthodox churches are yet to be cleared.

The plan once complete is to return the plots to the various church denominations and allow visits. At the crumbling, brick-and-concrete Ethiopian monastery on Sunday, a fading fresco of Jesus being baptized by John the Baptist could still be seen inside.

Signs hung on the walls with notifications that the location had been cleared of explosives.

A collection of pieces of mortars and other explosive remnants sat alongside a nearby roadside as a demonstration of some of what had been found.

“The Halo Trust has reached a pivotal point in our work to clear the baptism site of land mines and other remnants of war,” the charity’s CEO James Cowan said in a statement.

He added that “we have completed clearance of the Ethiopian, Greek and Franciscan churches.”

The majority of the mines were laid by Israeli forces after the country seized control of the West Bank in 1967 from Jordanian troops. Other unexploded ordnance from both Israel and Jordan has remained lodged in the ground, including around the churches, which were evacuated by Israel in the 1970s.

Israel’s control of the West Bank has never been recognized by the international community, which considers the land occupied Palestinian territory.