I have some good news and some bad news
First the good news. Under pressure from the parliament, the government appears to have agreed to raise the pay scale for public workers. The current scale was set over twenty years ago, and woefully underpays our teachers, police, public health workers and other civil servants. The current scale allows for a family, with the two parents working as teachers, to remain significantly under the official poverty line currently estimated at a little more than 500 dinars a month. This drives away the brightest and the more ambitious to other fields and to the private sector, and drains away morale from the very people who we should be counting on to build the youth of the country. The public sector has become a place of bitterness, apathy, cynicism, and potential corruption. I therefore hail this development.
How much will it cost? Salameh Dir’awi (Al Arab Al Yawm) estimates that each dinar per month will cost six million per year. This seems to be based on an assumption of 500,000 people in the civil service, the military as well as retirees who are not in the social security system, which I think is an overestimate. So, suggesting 20 dinars per month, he thinks that this will cost an affordable 120 million per year. I suspect this will be about the scale of the pay raise.
What about the bad news? Well, the government wants to raise the price of fuel and to impose a sales tax on it. This seems to be a part of a deal with the parliament, with the delay of the tax until 2008. Readers will remember how the government tried this during last summer’s parliament session, with no success. People are skeptical about the need for raising prices. The minister of finance said in the budget presentation that the government is breaking even in the oil business. However, the government wants to raise prices in case there is a price spike caused by a war on Iran. It is not obvious if this is a credible scenario, or whether the government knows something that we don’t. In any case, I don’t understand why they can’t hold off the price rise until this supposed spike happens. Oops. Silly me. I do understand, actually.
How much money will they make? It depends on how much a price hike is made, and the nature of the “quality” tax that will be imposed. The government/Jordan Petroleum Refining Company sell about 1.35 billion dinars worth of fuel per year. Assuming this new “quality tax” is similar to the general sales tax (16%), the revenue will be 215 million a year. While Al Arab Al Yawm says that the tax will be on all fuel, Al Ghad suggests that the tax will only be on gasoline. 1040 million liters are sold annually of various types of gasoline for a revenue of 500 million dinars. This will go up to about 660 million when unleaded gas is phased in (assuming they keep the current unleaded price the same). According to an Al Ghad table (not on line), the current cost of a liter is 360 fils, and so they make 280 fils on each liter of unleaded as it is now. You can do the math.
Sounds like a good deal for the government, but not for you or me.