Jordan increases minimum wage, raises taxes to narrow deficit

Published February 9th, 2017 - 02:00 GMT
Earlier this month, the Cabinet decided to deduct 10 per cent of any sum above JD2,000 in monthly salaries of civil servants, and set a cap of JD3,500 on public sector salaries. (Shutterstock)
Earlier this month, the Cabinet decided to deduct 10 per cent of any sum above JD2,000 in monthly salaries of civil servants, and set a cap of JD3,500 on public sector salaries. (Shutterstock)

Jordan's Council of Ministers on Wednesday took a set of economic measures that included hiking fees and taxes as well as raising the minimum wage and cutting on expenses.

The decisions included raising taxes on cigarettes, soft drinks and telecom services, as well as increasing fees to issue passports from JD20 to JD50.

In addition, they included raising the minimum wage limit from JD180 to JD220, according to a government statement carried by the Jordan News Agency, Petra.

The measures came as the government seeks to secure JD450 million, as part of a plan to narrow the budget deficit.

According to the statement, the decision “aimed at enhancing job stability and safety for workers, increase demand on commodities and services, and encourage youth to take jobs.”

The council stressed the importance of inspection campaigns on facilities and companies to ensure that the decision is enforced.

The decision applies to Jordanian workers who are defined in the Labour Law 8/1996 and its amendments, regardless of payment methods, as the minimum wage will be divided by 30 days and the pay will be paid accordingly, whether on a daily or weekly basis or any other method.

The Cabinet also decided to increase the allocations of the National Aid Fund (NAF) to 10 per cent at an annual cost of JD10 million, increasing the monthly aid to 9,000 households that receive it by JD20 or from JD180 to JD200.

The decision also allows sons and daughters of beneficiaries to work for three months to one year and in small self-owned enterprises for two years, and to only consider 15 per cent of their pay as part of their families’ incomes.

In the same context, the Cabinet decided to write off previous small loans extended to underprivileged beneficiaries. The total number of borrowers stands at 2000 households, each having borrowed an average of JD800.  

Earlier this month, the Cabinet decided to deduct 10 per cent of any sum above JD2,000 in monthly salaries of civil servants, and set a cap of JD3,500 on public sector salaries.

The funds collected, which apply to the prime minister and ministers, among other top-ranking officials as of February 1, will go to support the Treasury as part of a broad plan to rationalise public spending.

Work permits

The Cabinet also decided to reduce the fees to renew guest worker permits to JD400, exempting employers from paying an additional JD100.

In addition, a 50 per cent reduction was granted on the fees due for the elapsed period between the expiry of work permits and their renewals if a guest worker chooses to stay with his/her employer.

A similar reduction will be granted to employers in the agricultural sector whose hired guest workers wish to move to another sector after their permit expires. 

Permit fees and any additional costs imposed on employers will be cut by 60 per cent if the guest worker wishes to leave the Kingdom indefinitely.

Under another exemption for the agricultural sector, employers will only be required to pay JD300 to renew work permits for guest labourers wishing to stay on with them, in addition to JD200 as a bank guarantee.

Revenues from permit fees will also be directed to support farmers with easy loans through the Agricultural Credit Corporation and the Agricultural Risk Fund, the statement said.

There are around 1.4 million guest workers in Jordan, a million of whom are illegal, according to Labour Ministry figures.

By Sunday, the ministry said it had issued around 400,000 work permits, noting that the workers who have those permits make annual remittances of around $1.5 billion, which constitute half the remittances that come from Jordanians working abroad.

Also on Wednesday, the government scrapped a “100-per-cent sales tax exemption” on fixed and mobile Internet services, effectively raising the tax rate to 16 per cent, from 8 per cent, as of Thursday. 

Internet penetration reached 87 per cent by the end of the third quarter of last year, with some 8.6 million users, according to official figures.

In addition, the Cabinet decided to impose a JD2.6 tax on the purchase of new mobile SIM cards — prepaid or post-paid — as of February 15. 

According to the latest available figures by the Telecommunications Regulatory Commission, mobile subscriptions by the end of September 2016 reached 16.7 million. Of the total, around 1.2 million are post paid.

In another move, the Council of Ministers scrapped a previous decision to reduce the sales tax on steel poles used in construction to 8 per cent. The Cabinet restored the tax rate to 16 per cent and also scrapped sales tax reductions on steel plates and galvanised iron coil.

Hikes to customs duties, commodity prices

The government approved the mandating reasons for a by-law amending the by-law of customs duties on imported commodities for 2017, adding 5 per cent to the duties on imported commodities, provided that the total value is no less than JD100 and no more than JD10,000.

The decision does not apply to exempted food items and other essential commodities, said the statement.

To “protect children and youth and fulfil the requirements of the World Health Organisation”, the Cabinet decided to raise the special tax on cigarettes by JD0.457 to JD1.205 according to the packet price, and to raise the special tax on fizzy drinks by 10 per cent.

Passports

For passports, the council approved the mandating reasons of the by-law amending the by-law governing passports fees for 2017.

The decision stipulates increasing the renewal fees from JD20 to JD50.

 It also stipulates keeping the JD20 fees for full-page passports and the army, security and civil defence personnel when they participate in the peace keeping missions, and in cases when the passport is renewed to change the civil status or after servicemen retire and change their passports.

The fees will be JD100 in case of renewal for a damaged passport, JD125 for a lost one, and JD250 after the first time.

For expats, the passport renewal fees will be JD100, for adding children JD15 and JD50 for an emergency travel document.

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