Thousands of Jordanians strike against IMF-driven tax rises

Special Thousands of Jordanians strike against IMF-driven tax rises
Thousands of Jordanians take to the streets of Amman on May 30, 2018 to protest against a new income tax draft law which was approved by the government recently and sent to parliament for endorsement. (AFP)
Updated 31 May 2018

Thousands of Jordanians strike against IMF-driven tax rises

Thousands of Jordanians strike against IMF-driven tax rises
  • Protesters in the capital Amman carried placards criticizing the government
  • They also accused politicians of corruption and squandering public funds

AMMAN: Thousands of Jordanians went on strike on Wednesday to protest against planned tax increases demanded by the International Monetary Fund (IMF). 

The draft amendments would double the income-tax base, putting more financial strain on people already suffering from an earlier tax increase and increased prices.

The increases are a condition of a three-year IMF economic program that aims to generate more state revenue to reduce public debt.

The head of Jordan’s income tax department, Hussam Abu Ali, told Arab News that the government is set on pushing the law through Parliament, which is now out of session.

“The government is very determined to have this law presented before the people’s representatives,” he said.

Jordanian political experts believe that the Parliament is unlikely to turn down a draft law coming from government even if it is not popular.

The new law lowers the minimum taxable income to 8,000 Jordanian dinars ($11,000) for an individual, 16,000 dinars for a family. It imposes a gradual increasing income tax on salaries above that.

Currently, income tax constitutes only 12 percent of the revenues of the government of Jordan. Just more than 4 percent of Jordanians are paying income tax, Abu Ali told Radio Al-Balad.

“This law will help improve the balance and will eventually allow the government to lower the 16 percent sales tax,” he said.

But the unions, which represent tens of thousands of private and public sector workers, are furious that the law will add to the pressures already being faced by their members. They accuse the government of caving in to IMF demands.

Ahmad Zoubi, head of the Jordan Engineers Association, said that the government had pushed the professional unions to a dead end.

A last-minute attempt to avert the strike failed on Tuesday when union heads refused any talks until the government withdraws the draft law.

The most affected sector was hospital workers, who went on strike in all sectors except the emergency units. 

Protesters outside the Professional Associations Union in Amman called on government to respect the wishes of Jordanians.

“I can hardly afford anything with my salary. We are taxed for the air we breathe and now they are also looking to rip off our salaries. Everyone knows the law is unjust and it has to be withdrawn,” Hatem Samara, an engineer, told Reuters.

The IMF economic program aims to bring down public debt to 77 percent of GDP by 2021 at a time when economic growth has been stagnant.

Jordan earlier this year raised taxes on hundreds of food and consumer items by unifying rates of sales tax at 16 percent and removing exemptions on many basic goods, Reuters reported.

In January the government also scrapped subsidies on bread, which doubled some prices.

The unions have called for another protest next Wednesday, saying that they will call for the fall of the government if it continues with the law.