Monday, August 14, 2006

Sales tax on fuel

Recently, the prime minister made a grand announcement concerning the new income tax law. In the list of legislations presented to the parliament in its new session, a proposed modification in the sales tax law is included, which will allow the taxing of the raw crude oil and petroleum derivatives. This information is buried deep into a news item in Al Ghad with little fanfare. I didn't find it in the other newspapers. Also to be included in the new sales tax list will be telecommunications services, cement, alcohol, tobacco and tobacco products and automobiles.

The reason given for a sales tax on fuel is hilarious. The justification is that it is “to make up for the price difference caused by floating the prices and due to the cancellation of the monopoly of the Jordan Petroleum Refineries Company". So, they need to make up for floating the prices, suggesting that they were making more money when the derivatives were subsidized. I have a better suggestion. Why don’t they return the subsidies and lower the prices to the previous levels? Do they think we are stupid or what?

According to the financial report of the JPRC for 2004 (before the recent rises in costs), their sales that year were are 1.24 billion dinars. Slapping a 16% sales tax would gross a cool 200 million dinars. This would dwarf the 30 million that the rejected income tax law would have brought in. This, as usual, will harm the poor and middle class in favor of the richer people who will enjoy lower income taxes. Add to that the tax on the other products and services, and you will soon figure that your government is trying to pull a fast one.

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7 Comments:

At 5:18 PM, Blogger Hamzeh N. said...

LOL, unbelievable man! Our government is just getting too predictable. Remember what I said before about sales taxes? Sigh!

I mean how is it not obvious to the people in charge of proposing these laws that this is something wrong? And how can it go out with the approval stamp of a royal decree on it?

I'm greatly disapointed.

 
At 6:25 PM, Anonymous Anonymous said...

It's time for a new government. This one has no-clue of what the public goes through surviving it's preposterous laws. The Gov. already receives (donor) CASH from neighbouring countries to purchase oil, as opposed to free oil for it's usage as it used to get from Iraq, when back then they were still selling it to the public & exporting it as well for additional governmental revenue. Now, they get donation cash, purchase oil, - and sell to the public. Additionally now with the intentions of converting all oil to Unleaded, raising it's price tag (removing subsidies, which I don't understand, as they get donated cash to purchase the oil).
With Amman, ranked 17th most expensive city to live in, in the world. We're living a fabricated lie.

 
At 2:30 AM, Blogger Arrabi said...

it's sad that newspapers & political parties in jordan are not taking the lead in finding this info and doing something about it.

khalaf, you should start a party :-)
(by the way, do you recommend any party in jordan? any one that you find "mostly" promising?

 
At 9:05 AM, Blogger Khalaf said...

Hamzeh: Of course I remember your comment about the fairness of the sales tax, with which I totally agree.

What is required is a popular movement to reject these changes. Counting on the government or the parliament would be wishful thinking. The rejected income tax law was defeated because of a popular movement, not the generousity of the politicians.

Anon: I think that they have gone past the issue of making money asking for donations, to the point of taxing the money that is paid to purchase oil.

The government claims that there are no cash or oil donations, and they are paying cash for oil. I haven't seen any evidence to contradict that.

Arrabi: I think that the answer to your first question will be the subject for my next post. As for political parties, they are too busy thinking about Lebanon to worry about the needs of the Jordanian people.

 
At 10:23 AM, Blogger Reem said...

Didn't they at all propose a tax on Air?

 
At 12:55 AM, Blogger Khalaf said...

Reem: I think they haven't figured out how to meter it.

 
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