(MENAFN - Jordan Times) Experts have proposed several options to increase public revenues and fill budget holes without resorting to the "pockets of limited-income taxpayers".
In recent interviews with The Jordan Times, the analysts stressed the need for tackling the Kingdom's growing deficit and public debts away from slapping more taxes on average Jordanians, who, according to the experts, have become the main financier of the government.
Raising tax rates on banks and large profitable companies, increasing royalties on mining firms and adopting the progressive income tax regime were among the proposals highlighted by the pundits, echoing the same demands by lawmakers when debating the state budget law few weeks ago.
Zayyan Zawaneh, a former adviser at the Central Bank of Jordan, the Ministry of Finance and the International Monetary Fund, criticised the approach consecutive governments have followed over the past years in addressing Jordan's economic and financial woes.
Whenever there has been a financial shortfall, governments found raising the sales tax on goods and services as the sole remedy for such difficulties, he said, explaining that ordinary Jordanians were always the most hit by increasing sales tax rates.
Policy makers have become even more unfair when they decided to reduce taxes on banks, telecommunication companies and the rich, making limited-income Jordanians the main source of public revenues, Zawaneh elaborated.
Among the solutions Zawaneh suggested was a short-term plan to reduce the number of independent government institutions. For example, he said, the investment sector does not need five agencies to handle and promote investments in the country. The same applies to other fields such as energy and water, he added.
The government can save JD260 million by restructuring the public sector within a year, according to the economist.
"Taxpayers in Jordan finance the budgets of two governments: the state budget and the JD1.8 billion spending bill of independent agencies," he said.
Another step the government should not hesitate to implement, Zawaneh said, is drafting a new tax law that would raise tax rates on banks and telecommunication firms and increase royalty fees on mining companies. Monopoly in the mining sector is also another problem depriving the treasury from more revenues, the analyst mentioned.
He accused governments of violating the Constitution by not applying the progressive income tax regime.
Economist Khaled Wazani agreed that progressive tax regime should be a priority in order to achieve fiscal sustainability.
He also suggested raising tax rates on non-basic commodities such as tobacco products to finance government spending on health, which is the case in various Western economies, adding that luxury items such as large TV units should be subject to higher taxes.
Wazani also recommended increasing special tax on large-engine cars, usually driven by the well-off, while the large companies, he said, should pay taxes according to their income.
"The higher income telecommunication companies and banks generate, the higher taxes they should pay," Wazani noted, highlighting low royalty fees on mining firms as a priority to be reconsidered in addition to higher fees that should be imposed on non-Jordanians when they renew their residency permits.
He argued that Arab and foreign residents benefit from government-subsidised products and services and higher fees are justifiable to make up for what is spent on them.
Qassem Hammouri, a professor of economics at Yarmouk University, pointed out that tax evasion by non-limited income professionals, such as doctors, lawyers, engineers and merchants, should be addressed by tax collecting agencies.
Agreeing that progressive tax system is a "must", particularly under the current economic conditions, Hammouri warned that resorting to the sales tax to fill budget gaps can lead to slower economic activity.
He accused the private sector of resisting the progressive tax regime, which he said is included in the Constitution, and called for comprehensive tax reform.
MP Anwar Ajarmeh, rapporteur of the Lower House Finance and Economic Committee, said that lawmakers are expected to debate a new tax law during the extraordinary session, expected to be held in June.
He told The Jordan Times that MPs will call for imposing higher taxes on banks and mining firms among other large businesses.
"Ordinary Jordanians should no longer remain the main source of tax revenues," he indicated, explaining that revenues generated from sales tax so much higher than those generated from the income tax, which indicates that there are flaws in the tax system, he said.
