‘Low-income Jordanians contribute more to tax revenues than rich’

AMMAN — Jordan Strategic Forum’s (JSF) position paper called on the government to consider flexibility, justice, transparency, clarity, variety and enhancement of the state’s income sources in the new income tax.

The paper, titled “What is needed from the new income tax law”, recommends creating a just by-law, through which people with higher earnings, pay higher taxes and those who make equal earnings pay equal taxes. 

Under the current tax system, around 69 per cent of tax revenues are generated from sales tax, while 17.6 per cent is generated from taxes paid by large companies, the paper that was issued on Tuesday said, suggesting that low-income people contribute to tax revenues more than the rich in proportion to their earnings. 

Employees contribute to tax proceeds by JD129.8 million annually, while JD66.1 million are the taxes generated from small and medium enterprises as well as labourers and craftsmen, the document highlighted. 

However, banks pay 65 per cent of the taxes paid by large companies that are listed in Amman’s stock exchange. 

JSF also called for a clearer and simpler law that can be easily understood by people to help them manage their tax returns, and to protect them from exploitation of some employees and auditors who usually exploit people who misunderstand the law. 

The forum also called for expanding tax sources, rather than relying heavily on the sales tax to generate proceeds. 

It also called for enhancing the state’s income sources to enable the state to practise its developmental activities to generate more revenues, with which they will be able to provide services of higher quality for the public; that in return will contribute to achieving inclusive economic growth to all social classes.

The paper was issued to focus discussions between all stakeholders around guiding principles of a good and modern tax system, JSF’s Research Director Ghassan Omet told The Jordan Times.

“We hope to make a difference through our discussions and meetings with the private sector, officials and others,” Omet noted

Wajdi Makhamrah, an economist, called for decreasing the sales tax to 8 or 10 per cent and compensating for the difference by raising taxes on other sectors such as large companies. 

He also called for imposing deterring penalties for tax evasion and encouraging people to provide tax returns and bills to help the state discover tax evasion. 

Makhamrah said that doctors who provide false tax reporting, declaring fewer profits than their real earnings, which they usually generate from their private clinics and operations in hospitals, are an example of those who evade taxes.

Meanwhile, economist Mazen Irsheid called for achieving social justice through expanding segments of tax payers.

Irsheid also called for decreasing sales tax on fuel, which represent over 50 per cent of its prices.