Public-private partnership

In a dramatic move, the government has decided to lift taxes and customs duties on 13 basic commodities. The hope is that removal of the 4% sales tax on these foodstuffs will lead to relief and jubilation. This depends on the food importers and merchants lowering their prices for a corresponding amount. The government says that they will intervene if they don’t.

I used to by a kilo of rice (Sunwhite or Tiger) for about 25 piasters. The other day, my wife brought home a 2 kilo package for 1.65 dinars, or about 82 piasters per kilo. According to the latest mercantile exchange information, US produced rice ranges in cost from 22 to 28 dollars per hunderweight (100 pounds). So, each pound costs between 22 and 28 cents. Shipping for the US to Aqaba is about 6 cents per ton. So, the cost of rice reaching Aqaba should range from 43 to 51 piasters (assuming they are sending us the high grade stuff. Ha Ha.). Add to that other costs like insurance, retail costs and so forth, and one would expect the price to the consumer should range from 50 to 60 piasters.

So, who is making the extra 22 to 31 piasters on the kilo of rice? The 4% sales tax accounts for about 2 piasters. I am sure that there will be no problem in subtracting that. However, it seems clear that there is massive gouging by the importers, who apparently have agreed not to undercut each others prices. The head of the importers’ association is happy with the lowering of tariffs, and promises to cut prices accordingly.

Will the government actually do something to alleviate the effects of price fixing on the consumer? They have the legal tools to do this. I wouldn’t count on it, however. Food importers have become a political force to be reckoned with. A record number of them ran for parliament last time, and one of them actually won (Tareq Khouri; Amman third). One again, the game of mutual accommodation between government and "the private sector" will come at the expense of the average Jo. What else is new? Besides, we are so used to theatrics that we would not know any real positive action if we saw it.