Jordanians promised no new taxes in 2020 budget

New finance minister Mohammad Ississ says government will seek other ways to raise revenues

Jordanians protest at the professional Associations compound during the second country's strike refusing the new incom law draft  in Amman, Jordan, on May 30, 2018. Angry protesters refused and forced the professional associations council to withdraw giving the government a chance and to continue the strike. (Salah Malkawi for The National)

Jordan's new finance minister has promised not to impose new taxes in the proposed 2020 budget, saying the government would seek other ways to boost revenues and lower public debt, including a crackdown on tax evaders.

Mohammad Al Ississ told parliament's finance committee on Thursday that maintaining "fiscal stability" remained a main concern. The budget is expected to be sent to parliament in coming days.

Jordan is struggling under a three-year IMF programme to rein in public debt that has hit a record 94 per cent of GDP, as part of long delayed structural reforms.

The government is seeking ways to increase revenues without resorting to new taxes that could fuel the same anger that triggered the biggest demonstrations in years when steep hikes pushed by the IMF, including on sales tax, came into effect last year.

"We have to reach the necessary revenues to continue fiscal stability," Mr Al Ississ said.

The government has also pledged cuts in public expenditure.

Parliamentarians said they would reject any proposals to raise water or electricity charges as officials say they plan to adjust the tariff structure. Parliamentarians also want the government to reduce sales tax on essential food items to help low-income Jordanians struggling with rising poverty.

TOPSHOT - Protesters raise their hands and wave flags near members of the gendarmerie and security forces during a demonstration outside the prime minister's office in the capital Amman late on June 3, 2018. Jordan's senate met on June 3 for a special session after another night of protests across the country against IMF-backed austerity measures including a draft income tax law and price hikes. Some 3,000 people faced down a heavy security presence to gather near the prime minister's office in Amman until the early hours of Sunday morning. / AFP / Khalil MAZRAAWI

Mr Al Ississ said tackling tax evasion that officials estimate costs the treasury hundreds of millions of dollars annually would help improve government finances.

"We will fight tax and customs evasion with all the power of the law," the minister said.

Mr Al Ississ said last week that the government had little leeway in the coming budget, which last year stood at $13 billion. Jordan has some of the world’s highest government spending relative to its economy.

The government in October agreed to increase the salaries of teachers after a month-long nationwide strike. The Cabinet also raised pensions for military retirees in what economists said was caving in to populist demands at the expense of fiscal prudence.

These moves combined have affected Jordan's finances and alarmed an IMF mission holding consultations in Amman on progress with the reform programme, officials and diplomats said.

Jordan was expected to ask the IMF for more time and to either extend the existing programme or put in place a new programme altogether, diplomats said. Officials said they would resist any IMF effort to push Jordan to adopt more austerity measures that risked increasing instability and civil unrest.

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