Jordan’s new profit tax could drive up car prices

Published December 12th, 2000 - 02:00 GMT

Car prices in Jordan are expected to go up next year if legislators approve a draft law imposing a 13 percent tax on importers' profit, official sources said on Sunday.  

 

Currently, auto importers pay a 13 percent general sales tax (GST) on their goods in addition to customs duty. However, should the draft be endorsed, new imported vehicles, regardless of the year of manufacture, would be subject to the proposed 13 percent tax.  

 

Officials explain that the rise would be meager, as the new tax would not be placed on the total price of a car. Rather it would be imposed on the profit an importer plans to make. Eyad Qudah, general sales tax department director general, explained that if an importer bought a car for 10,000 Jordanian dinars, and his profit was JD 1,000, the extra tax would be JD130, not JD 1,300.  

 

But citizens, to whom the cost of the tax would be delivered, seem to be fed up with any hike in auto prices. "I feel I am lost. There is a new law governing car prices everyday. Neither I nor my family knows when or how to buy a car," said 25-year-old Ruba Mohammad. She was referring to the slew of customs duty laws, started in October 1999 and ended on August 31 this year, which unified tariffs on both used and brand-new vehicles.  

 

Dina Abdul Razzaq said people cannot take any more taxes. "People are already suffering financial problems. Thus, a rise would simply add to their woes," Abdul Razzaq told the Jordan Times.  

 

Similarly, dealers of new cars, who hailed the August 31 decision, criticized the proposed tax, as "people are not economically-prepared for any price increases. Any additional financial burden on importers would be reflected in the price tags of vehicles," said Salameh Jundi, president of the Automobiles and Spare Parts Association. "I expect lower demand for cars when the new tax is levied," he explained in an interview.  

 

When the draft is endorsed, cars will be added to the list of items whose prices would go up under the second phase of the GST, which would come into force as of January 1, 2001. The General Sales Tax Department forecasts its revenues to jump to more than JD500 million next year, against some JD460 million to be collected by the end of 2000. — ( Jordan Times )  

 

By Rana Awwad

© 2000 Mena Report (www.menareport.com)

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