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Abu Dhabi, UAESaturday 20 October 2018

A charm offensive by Jordan's government over tax changes has come unstuck 

A series of town hall meetings have seen officials met by anger, jeers and outright refusals to talk 

Jordanians protested in the capital Amman in June 2018 over an income tax draft law driven by the International Monetary Fund. AFP Photo
Jordanians protested in the capital Amman in June 2018 over an income tax draft law driven by the International Monetary Fund. AFP Photo

As statements go it could be classed as both carrot and stick.

"As private individuals, you are welcome," Majed Sharari, the former mayor of Ma’an, a city in southern Jordan, told several ministers in a video that circulated widely earlier this week.

"But as government representatives you are not welcome anywhere in Jordan. You and your income tax law are not welcome in the Jordanian street."

His sharp words were perhaps the most diplomatic message that the government has received while travelling across Jordan to pitch a controversial income tax law, the same issue that brought down a government three months ago.

In Town Hall meetings, government ministers have met tough questions, ridicule, frustration and all-out anger from citizens.

The first such meeting ended abruptly in Tafilah, a town in southern Jordan on Saturday, while in the northern town of Mafraq, normally the bedrock of government support, citizens raged that they should not "pay the price" of officials' mismanagement.

And on Wednesday citizens disrupted then jeered off stage the visiting delegation in the northern city of Ajloun. The crowd erupted into cheers as the ministers were led offstage and through a backdoor.

In what now seems like dramatic understatement, Prime Minister Omar Razzaz cautioned that "it is not easy to sell the law to the public" when he unveiled the draft law last week for discussions.

Jordan's economic outlook is challenging, but even the premier could not have predicted such a hostile reaction to the government's effort at a charm offensive.

It is not just citizens who are fuming about the income tax law.

The mayor and municipal council of Zarqa, in Jordan's northeast were elected last year as part of a much-touted decentralisation of powers from Amman. But they boycotted the Town Hall planned in their area.

Professional associations, the unions who led protests and work stoppages that brought down the previous prime minister over a similar law, have also shunned the meetings.

Protesters and citizens have drowned ministers out with chants demanding Mr Razzaz's resignation, less than three months since he was sworn in.

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Read more:

Jordan's delayed tax reform to hamper government's fiscal reforms

Jordanians sceptical of corruption crackdown

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The law is considered a priority for the government as it attempts to control Jordan's debts, which currently stand at JD28 billion, 96 per cent of the country’s gross domestic product. The country's debt level has hovered around 90 percent of GDP for several years, and spurred the previous government to embark on a series of austerity measures that included cutting bread and electricity subsidies.

The new law is expected to generate an additional JD360 million for the government in 2019.

Newly appointed Jordanian Prime Minister Omar Al Razzaz is battling to keep tax reforms alive. AFP Photo
Newly appointed Jordanian Prime Minister Omar Al Razzaz is battling to keep tax reforms alive. AFP Photo

While the sum is small compared to the national debt, the tax reform was deemed essential to Jordan continuing to receive a $723 million credit line from the International Monetary Fund. Abandoning the tax plan would result in the kingdom paying additional interest on hundreds of millions of dollars worth of loans, the government warned.

Jordan's deputy prime minister was more blunt, telling a television news channel that the government was dealing with a "lack of confidence" from the IMF.

But citizens have been doing their homework.

The current law provides a tax exemption for all households with an income of JD24,000 or less annually. Under the new law, the line of eligibility for tax exemptions will drop to JD18,000 per household income in 2019, and down to JD17,000 in 2020.

The current income tax law includes a package of additional tax exemptions and deductions of up to JD4,000 based on the number of dependents, medical treatment, university tuition and even rent. These crucial, secondary exemptions would be scrapped altogether by the new law.

Citizens object that under a rising cost of living, a near-record 18.7 percent unemployment rate, increase in electricity bills and rent, and stagnant salaries, the income tax law is a death knell for many families.

"Poverty has become a widespread phenomenon in Jordan, people are coming in to buy a 25-cent packet of rice or two eggs to feed their family," Mousa Shatnawi said from his supermarket in Mafraq, Jordan.

"Any increase in tax will lead to an increase in prices, and people’s salaries are the same. This is a disaster for many."

The government is not backing down, insisting that the existing tax structure is unjust; 17.3 per cent of the government’s revenues come from sales tax applied on goods and services, almost six times more than the three percent the government is currently receiving from income tax.

But it is more than simple frustrations that are being felt. It is distrust and anger over successive governments’ failure to curb corruption and mismanagement citizens claim have cost the treasury billions and placed Jordan in debt.

At multiple Town Hall meetings, citizens have accused the government of failing to clear up corruption, even demanding "who is behind Aoun Mattiya?" – the main suspect in a counterfeit brand cigarette case many believe is merely a frontman for influential elites in the halls of power.

Others have called out “where is Kurdi,” referring to the husband of the King’s paternal aunt who was sentenced to 37 years in prison for embezzling millions while chairing the Jordan Phosphates Mines Company but remains at large in Britain.

Jordan's vast privatisation programme, started more than a decade ago, is also a subject of ire, with officials accused of selling assets off too cheaply, mismanaging them, or stealing funds from the sales of state institutions and resources altogether.

It is a sentiment many agree with.

“The income tax is not the core issue here; people are talking about privatization, people are talking about unemployment, people are talking about debt and perceived corruption,” says Zayyan Zawaneh, a political-economist and former advisor to the Central Bank of Jordan.

“Jordanians want to see a comprehensive economic and political reform package, but the government has not listened to the message.”

"Successive governments either stole or turned a blind eye to the theft of aid money and government contracts," said Hussein Khaled, a 28-year-old farmer in Mafraq.

"We refuse to foot the bill."