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Abu Dhabi, UAEMonday 20 August 2018

Jordan seeks ways to defuse anger over tax hike

King Abdullah calls for national dialogue to reach consensus on proposed changes

Members of the Jordanian gendarmerie and security forces stand guard as protesters shout slogans during a demonstration outside the prime minister's office in the capital Amman on June 2, 2018. Khalil Mazraawi / AFP
Members of the Jordanian gendarmerie and security forces stand guard as protesters shout slogans during a demonstration outside the prime minister's office in the capital Amman on June 2, 2018. Khalil Mazraawi / AFP

Jordan's senate on Sunday attempted to defuse widespread anger over proposed income tax increases that have triggered daily nationwide protests.

The senate sent two recommendations to King Abdullah, who on Friday ordered a freeze on price increases that had also outraged citizens.

The first proposal was to ask the government to withdraw the bill on amended income tax rates and set up a committee to oversee a national dialogue, the Alghad newspaper reported.

The other is that the king issue a royal decree to convene an extraordinary session parliament in the next few days to discuss the bill.

The draft law seeks to lower the threshold for liability to income tax, thereby expanding the number of taxpayers, as part of the government's programme of economic reforms to boost revenues, tame the budget deficit and cut spiralling public debt.

The proposed changes come after a round of austerity measures earlier this year which almost doubled the prices of bread and fuel and increased sales tax on hundreds of everyday goods from internet subscriptions and electricity to soft drinks and stationery.

King Abdullah chaired a meeting of the National Policies Council on Saturday night and sought to reassure Jordanians that he empathised with their situation.

The king said it was unfair for citizens alone to shoulder the burden of financial reform, stressing that shortcomings in providing vital services such as education, health care and transport would not be tolerated, the Petra state news agency reported.

He urged the government and parliament to lead a comprehensive, rational, national dialogue to reach a consensus on the draft income tax law that does not burden the public, combats evasion and improves efficiency of tax collection.

"I know how much Jordanians have endured…. We are working day and night to overcome this difficult situation," he said.

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The king stressed that the challenges facing the economy were a result of the difficult regional conditions.

"The problem does not lie in Jordan. Jordanians are ready to sacrifice for their country, and with their strong resolve, we will persevere and overcome these challenges, as we have surmounted others before.”

Jordanians protested again near Prime Minister Hani Mulki's office into the early hours of Sunday, demanding that his government step down. They were kept from reaching the office by gendarmes.

“We want a national government, and not a group of thieves,” the crowds chanted. “Raise your voice … we will not be quiet even if we are in a coffin.”

In one Amman neighbourhood, protesters directed their anger against King Abdullah despite laws against criticising the head of state. Gendarme forces fired tear gas to disperse the crowd, according to reports on social media.

Protesters have blocked roads and burned tyres in some parts of the country, but the demonstrations have largely been peaceful.

“These are social protests and if the government does not respond, it will lead to an explosion,” said Ahmed Awad, director of the Phenix Centre for Economic and Informatics Studies in Amman.

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Editorial: Austerity in Jordan is only half the fight

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So far the government has not shown any signs of backing down on the income tax bill, which is part of broader austerity measures recommended by the International Monetary Fund.

However, following a meeting on Saturday between the government and Jordanian professional associations, both sides agreed to form a committee to discuss amendments to the bill.

Prime Minister Mulki told a press conference: “Referring the draft income tax law to parliament does not mean the bill ... will be approved. The [lower] house has many measures to address any draft laws it receives.

“We have completed 70 per cent of the [IMF] programme and in case we endorse the law in a modern manner that will protect the poor and middle income classes, we will finalise the programme by the middle of 2019 and reach a safety haven.”

But most Jordanians remain unconvinced that the government is working for their interests. And despite the promise to hold further talks with government, the professional associations called for another mass strike on Wednesday.

Unions say the tax bill will worsen a decline in living standards.

Earlier this year, a general sales tax was hiked and a subsidy on bread was scrapped as part of the three-year plan that aims to cut Jordan's $37 billion debt -- equivalent to 95 per cent of gross domestic product.

Critics say such measures hurt the poor and accuse politicians of squandering public funds and corruption.

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