Wednesday, April 12, 2006

Facing up to nonsense

I have repeatedly complained about how timid everybody in Jordan is about confronting even the most outrageous nonsense coming from Islamists. So, it was refreshing to read this article written by Tariq Alhomayed in Al Sharq al Awsat and reprinted in Al Ghad. Alhomayed highlighted an outrageous assertion by Zuheir Abu Ragheb, an IAF deputy, who claimed that the raising of the prices of fuel could have been averted by raising taxes on alcohol and tobacco.

The math works like this: The savings due to the rise in fuel is estimated to be about 420 million dinars. The average Jordanian family spends 218 dinars on cigarettes and 1.6 dinars on alcohol. There are about 1 million families in Jordan. So, 218 million is spent on tobacco and 1.6 million is spent on alcohol.

Obviously, alcohol is not consumed in a large enough amount to make any difference. The only way to collect the 400 million needed is to triple the cost of cigarettes, assuming the consumption levels stay the same. However, if this happens, two things will happen. People start smoking less (which would be good but won't help the budget), and more smuggling will take place to take advantage of the price difference. In either case, raising cigarette taxes will not help the shortfall.

But, who says that politicians need to make sense? As long as it is what people want to hear, then it is all good. The budget can be balanced by raising the cost of a bottle of beer by 30000%, and all those boozers can pay the oil bill for the country.

Back to Alhomayed, who eloquently points out that the only reason the IAF is making this "proposal" is to embarrass the government, using simplistic emotional arguments. He also makes fun of the new Hamas government, which is talking about the danger of singing and dancing, since they can't do anything tangible to help their economy or free their people and land.

I hope that the taboo against criticizing Islamist nonsense continues to disappear. It is about time.



At 12:29 AM, Anonymous Anonymous said...

I see an alternative solution here: Get the masses drunk and more so hooked on booze. This will serve two purposes. One: an increase in the consumption of alcohol means that an increase in the alcohol tax will generate some valuable income to the government, and two: a drunken populace is much easier to manipulate.

Therefore, I declare here that it is the national duty of Jordanians to drink more and think less,...or smoke themselves to a sudden heart attack.

At 3:23 AM, Blogger JasonSpalding said...

Does Jordan employee many migrant workers?

At 5:36 AM, Blogger Ziad said...

It's pure politics. You see this type of "lying with a straight face" type arguments in politics all over the world. What makes this worse is that they cloak themselves with a moralistic mask and pretend that they are super-moral, don't lie, and above the "dirty politics".

At 1:37 PM, Blogger Khalaf said...

Jameed: I agree. It might actually improve driving skills here.

Ziad: The problem isn't politicians lying. The problem is that nobody dares to challenge them because they hide behind religion.

At 3:25 PM, Anonymous Anonymous said...

I think the implication was that there were other sources that would lead to methods of cutting the deficit without having to resort to fuel hikes which affect everyone, especially the poor.

cigerettes, alcohol, duty taxes, certain luxary imports, fighting corruption, fixing public transportation...the list is endless and the point here is that instead of trying to look for other methods (all of which could be employed if we want to get technical about the math) what the government does is it raises fuel prices.

when you raise prices 3 times in one year that says the government is to lazy to look at any other alternatives.

At 5:20 PM, Blogger Khalaf said...

Actually, Badran raised the taxes on cigarettes and alcohol, more because he was too afraid to say no than because it would make any difference. Indeed, it didn't make a difference.

Being technical about the math is the core of the issue, not something to be brushed off as secondary.

At 5:31 PM, Anonymous Anonymous said...

who said i was brushing it off?

but why should we brush off every or any other alternative. yes some taxes were raised sure. but why isnt their a mixed economic approach? why don't they launch several fronts, which allows them the flexibility to excercise moderation: a little of each?

instead whenever we run into economic trouble we raise fuel prices. end of story.

great economic policy

At 8:10 PM, Blogger Khalaf said...

Nas, it is clear that Abu Ragheb's proposal springs from a social agenda rather than an economic one. I disagree that government should be in charge of people's choices, but that me. Honesty requires him to say that he wants to ban alcohol, not to say that even higher taxes on it will solve the budget. The approach is dishonest, and it should be recognized for what it is.

At 8:30 PM, Anonymous Anonymous said...

lol man the government is always in charge of people's choices; raising fuel prices is not exactly a laissez faire economic policy.

nonetheless, put his approach aside, put whoever said it aside. let us look at the facts: corruptions costs the country millions, standards of living have not increased and people are actually poorer, fuel prices affect everyone.

is it not a reasonable request to suggest looking at an economic policy which attempts to cut the deficit by offering a sustainable economic approach based on various sources of monetary input?

it's like an equalizer sound board; what the government does is turn up the frequency one channel when really all of them should be adjusted to achieve any sense of harmony.

taxing ciggerettes may not solve the problem, but neither will raising fuel prices. why dont they try a mixed approach?

At 10:08 PM, Blogger Unknown said...

Khalaf, IAF officals are not playing games here. Yes their suggestion is a social and not economic one however there is an explanation for all of that. The reason for their alternative proposal is because they as Hamas have no economic agenda. They got a nice banner(Islam is the solution) but no explanation of how they are going to apply that into unemployment, water shortage, tourism, gas price inflation etc...

They believe that once they manage to close mixed-gender swimming pools, shut down Jarash festival and prevent Alcholol usage on board the RJ then Jordan will be free from all of its challanges.

At 10:21 PM, Blogger Khalaf said...

Nas, My post was not about economic alternatives. However, in principle I would say that the government shouldn't be in the subsidy business. So, I disagree that taxes should be raised to subsidize fuel. This is bad policy and bad economics. Money raised by taxation would be better spent on other priorities.

Issam, I agree. However, my problem is with the way people are intimidated by the IAF simply because of their use of religeon. The fact that nobody seems to challenge them is what emboldens them and weakens their opponents.

At 11:03 PM, Anonymous Anonymous said...

khalaf, again, you seem to have missed my point. i'm not saying that taxation should be the number one source. i am saying a number of sources and a number of approaches should be implemented to get a better result.

At 11:53 PM, Blogger Khalaf said...

My point is the same, whether you are talking about taxes being a number one source or a number two source or a number three source. Of course, government should be more efficient and less corrupt. The savings should be used to improve services and not for subsidies. Rising costs of living should be dealt with by improving people's income by creating more and better employment opportunities.

At 1:17 AM, Anonymous Anonymous said...

I'm personally of the opinion that fuel prices in Jordan are bound to keep rising no matter what. However, I do agree with Nas that there are other options that the government can take in order to delay the rise in the fuel prices more. I think the government is doing one right step a little too early by raising fuel prices and at the same time is ignoring many other right steps. I've already expressed my wish to see a new income tax law and I believe that will have a much greater effect on the government's yearly budget.

I agree that this IAF statement was poorly calculated and quite honestly I don't take it seriously. If you ask me, the IAF member who produced it could have done all Jordanians a favor if he had demanded a reform of the income tax law instead, but oh I forgot, that would mean he would probably be affected since he naturally makes some income! While of course he doesn't drink and probably doesn't smoke so it's very easy for him to ask for a raise in taxes on alcohol and tobacco.

At 9:54 AM, Blogger salam said...

Thanks khalaf,I thought about this issue too,and how they were not making any sense or doing any mathmatical calculations before speaking,but my political and economical backgrounds are rather shallow I wouldn't have known how to express myself..thanks for writing about it.

At 10:49 AM, Blogger Khalaf said...

Hamzeh: Some ideas about the income tax issue are in the new post.

Salam: You are very welcome.

At 12:57 AM, Blogger Batir Wardam said...

This is a very lively and informative discussion. The previous government has already increased the taxes on alcohol and cigaretts which I support totally. The revenues from the tax increase will directly go to the support of the Jordan Olympic Council for Sports and not to the treasury. The interesting mathmatics is that if our people stop smoking by 50%, reduce their blabla mobile nonsense talk by 50% and maybe stop drinking by 75% they can actually save the money for oil derivatives and live a happy and healthy life.


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