JSF paper urges reconsidering sources of tax revenues

AMMAN — The Jordan Strategy Forum (JSF) on Sunday called for reconsidering the sources of tax revenues, especially that the ratio of tax revenues to GDP is low in Jordan compared with international level and ranges between 15 to 16 per cent.

The JSF said that the percentage of the sales tax to the total tax revenues in Jordan is "very high" compared with international levels and stands at around 72 per cent.

In a policy paper titled: "Sovereign Debt: What is it? What are the Implications, & Why Do Economies Default?", the JSF added that tax revenue from “individuals” makes up 0.9 per cent of total tax revenues, which is considered “very low”.

The forum added that tax systems in both advanced and developing countries grant “tax concessions” to some consumers and producers. 

Based on several tax systems, JSF showed that the productivity of tax system in Jordan is low, where the productivity of value added tax stands at 0.31 per cent and the corporate income tax stands at 0.13 per cent. 

The JSF said that the Jordanian economy needs a modern tax system that is “fair, diversified, yields sufficient revenues to the government and easy to administer”.

The paper aims to shed light on Jordan's credit classification compared with other countries, especially in light of the developments in the global economy, such as the COVID-19 pandemic and the repercussions of the Russian invasion of Ukraine, which contributed to exacerbating global inflation rates and renewing the state of uncertainty. 

The forum also recommended the adoption of a fiscal council, which is an independent non-partisan public entity to “help foster transparency and promote fiscal stability”.

According to the forum, the central government debt to GDP ratio in Jordan went up from 78 per cent in 2019 to 88 per cent in 2020.