Jordan: Budget deficit exceeds 7 percent, premier says
Prime Minister Ali Abul Ragheb on Sunday told deputies that the Kingdom's budget deficit has reached over seven percent, and that the government is obliged to decrease it to six percent by next year.
The premier divulged the information during a House meeting, after several deputies tried to delay the implementation of amendments to the 1994 General Sales Tax Law.
Last week, the House began the debate over the first article of the amendments but the meeting was terminated due to lack of quorum. Several deputies then charged that the article was endorsed in the absence of the majority.
On Sunday, the House voted again on this article, but deputies differed over when the law should be implemented.
The House Economic and Finance Committee recommended implementing the amendments in January 2001, hoping that by then citizens would be more capable of bearing the “slight margin” of increase in the tax. (Although former Premier Abdur-Ra'uf S. Rawabdeh had told deputies that the sales tax would not go beyond 13 percent, the committee's chairman, Deputy Samir Kawar, acknowledged that it would increase by a “slight margin.”)
Still, several deputies proposed that the law be implemented after one year of its endorsement, on grounds that the Kingdom's economy needs ample time to improve.
In response to their remarks, Abul Ragheb said that according to the 1994 law, the government is obliged to implement the amendments which constitute the second phase of the IMF economic reform program.
“The amendments should have been endorsed at the beginning of this year. But we postponed them due to the [poor] economic conditions which we all know very well,” Abul Ragheb said.
“But now the budget deficit has exceeded seven percent, and we are obliged to decrease it to six percent by next year.”
Several deputies later walked out in protest, in a bid to dissolve the meeting. But the House continued the debate, with a bare quorum of 41 lawmakers.
The House endorsed 16 out of 23 articles, and is expected to end the debate on Tuesday.
The amendments mainly aim to organize the tax collection process and impose stricter monitoring on merchants to curb tax evasion.
But they also impose a sales tax, currently standing at 13 percent, on a list of products and services that were previously exempt.
Several deputies protested that the list presented by the government included primary commodities mainly, and that the increase in their prices would be most detrimental to poor families.
In a bid to curb the negative effect of this draft, the House committee modified the list of products in order to exclude as many primary products as possible from the tax.
Among the products that would still be exempt from the tax are: sugar, tea, dairy products, bread, water, vegetable oil, and fresh or frozen fruits and vegetables.
Services that would still be exempt from the tax include school and university education, transportation, banking and medical services.
Although the government previously proposed imposing a tax on primary inputs for pharmaceuticals, the committee recommended that they remain exempt.
The House is expected to vote on these proposals on Tuesday. — (Jordan Times)
By Dima Hamdan
© 2000 Mena Report (www.menareport.com)