JSF releases analysis of new income tax law

AMMAN — The Jordan Strategy Forum (JSF) issued a policy paper entitled, "the amended income tax law in the context of the financial policy in Jordan", as part of an effort to enrich national dialogue on the income tax law.

The JSF said in the statement, carried by the Jordan News Agency, Petra on Saturday, that the paper reviewed the status of the financial policy in Jordan and its weaknesses and analysed the proposed law according to what should be addressed in the financial policy, since the income tax law cannot be separated from the Jordanian financial policy system.

In assessing the public expenditure and the financial policy's public revenues, the policy paper showed that public spending in Jordan has been significantly reduced in recent decades and public expenditure of the total Gross Domestic Product (GDP) declined by 29.9 per cent in 2016 and 2017, compared to 43.7 per cent in 1976 and 1985.

The JSF stated that Jordan’s rate of public expenditure during the last two years has been less than in many countries around the world. The rate in France was 56.6 per cent; Austria, 50.2 per cent; Croatia, 46.5 per cent; The Netherlands, 43.6 per cent; the United Kingdom, 41.5 per cent and Latvia, 37.8 per cent.

As for public revenues, they were estimated at 22.8 per cent of the GDP in 2015-2017, which was lower than Finland (53.9 per cent), France (53.4 per cent), Denmark (53.2 per cent), Austria (49.4 per cent), Germany (44.9 per cent) and Romania (32.4 per cent).

The figures in the paper also showed that the percentage of tax revenues in relation to GDP in Jordan is 15.4 per cent, while in Poland it is 20.5 per cent; Slovenia, 21.9 per cent; Latvia, 22.3 per cent; The Netherlands, 23.7 per cent; Sweden, 40.8 per cent and Denmark, 46.7 per cent.

The JSF said that accordingly the government must work to generate more revenue to create the financial capacity to deal with the challenges it faces, and allow more spending in all areas that stimulate growth over the medium term, including infrastructure, healthcare and education.

The paper showed that the government heavily relies on sales tax to achieve tax revenues, which account for about 69 per cent of the total tax revenue generated by the government. According to JSF, this percentage indicates that the poor contribute more to tax revenues, in comparison with the well-off. 

The JSF stressed that the government must assess its operations and investments in terms of cost and quality of outputs, control squandered spending, and strengthen censorship and accountability when spending public money.