Gov’t to reach set revenue target through more taxes, subsidy cuts

AMMAN –– Government incentives for property buyers will not be resumed as tax and fee exemptions have deprived the treasury of nearly JD400 million in the past three years, Finance Minister Umayya Toukan said.

In 2009, the government exempted homebuyers from registration fees and taxes in a bid to stimulate the domestic real estate sector, which was negatively affected by the global downturn.

At a dialogue session with members of the Jordan Businessmen Association on Sunday night to brief them on the economic and fiscal challenges facing the country, the official pointed out that the government has a set of measures to achieve the targeted 12 per cent increase in domestic revenues projected in this year’s state budget.

As some experts attending the meeting argued that by removing the exemptions demand on residential properties will slow down and ultimately affect revenues, Toukan countered by stating that the revenues of the Department of Lands and Survey on Sunday, for example, reached JD1.8 million, while when the exemptions were still valid the department’s daily revenues were around JD800,000.

Among the measures to boost domestic revenues projected for this year to JD4.94 billion from JD4.38 billion in 2011, he cited that the deficit-ridden state budget needs immediate relief from the escalating cost of the currently used generalised subsidy system.

Fuel subsidies will be directed to low- and medium-income people only, while electricity and water tariffs will be increased gradually on the basis of consumption, he explained.

Noting that the ministry is working on a mechanism to exclude the well-off from the energy subsidy, Toukan said such a measure will save around JD250 million this year, elaborating that there are plans to raise tax and fees on non-essential commodities and services.

He also said that the ministry will review the list of 260 items and services that were exempted from sales tax last year, saying that the majority of these items should not be tax-free.

According to the minister, the increase in domestic revenues will see a boost after the treasury receives JD50 million due this year on mobile operator Umniah as third generation fees.

Asked if the budget assumptions related to the volume of estimated foreign assistance would be realised, the minister said that out of the JD870 million foreign grants projected for this year a total of JD170 million was confirmed to be coming from the US and EU, while the remaining amounts will be granted by Gulf countries.

“If we don’t receive the JD700 million, we will have to cut spending by the same amount,” he noted, elaborating that over the past 20 years Jordan has always received the same volumes of the projected grants.

In regards to the economic challenges facing Jordan, Toukan –– although acknowledging that part of the problems was caused due to unsound policies –– blamed regional instability and global uncertainties for the worsening economic conditions.

jordantimes