The Bakhit government promised in its policy statement in November 2005 to develop laws to combat terrorism and corruption. On the contrary, it has been forced to present a law to combat the middle class of Jordanian citizens.

  Back in September 2005, while discussing options for facing the economic crises caused by the increase in international oil prices and the budget deficit, the Badran government promoted the term "tax reform" to increase the treasury's revenues of taxes. The argument was presented by the Minister of Planning Suhair Al Ali as an issue of fighting tax evasion. The income tax in Jordan contributes only 3% to the GDP while in many other countries in the Middle East the contribution is more than 7%. In the USA and Western Europe it can reach 35%.   

   What we need to do in Jordan is to increase the contribution of income tax to the national economy while minimizing tax evasion. Fair enough, since tax evasion is usually done by big corporations and influential political/ economic figures and not ordinary citizens. Non-productive economic activities like stock markets deals and real estates contribute to a rapid flow of cash with minimal taxes to the treasury.

 So, one would expect a tax reform to target the tax evasion by increasing income taxes on the wealthy and rich, and on non-productive economic sectors, especially banking, insurance, real estate, land tenure and stock markets. On the contrary, the new income tax law targets the individuals, with special focus on the Middle Class, which earns an income in the range of 9,000- 20,000 JDs.

  The new law was drafted by the Badran government with no public participation or consultation, issued by the Bakhit government as the interim law no 24 of the year 2005. The law, fully implemented starting January 1^st 2006 was presented to the lower house of parliament, which has been brave enough to refuse it based on the argument that "interim laws" are not constitutional.

  But there is a big loophole in our legislative and political system. After the law was refused by the lower house of parliament, it has been sent to the higher house, Majlis Al A3ian where it can be either discussed or kept in the drawers. If the law is not discussed, it remains effective and the only way to modify it is for the  Majlis Al A3ian to discuss, refuse and then send it back to the government to modify it. Even the government itself cannot withdraw the law if it remains with the  Majlis Al A3ian.

   The new law, abolishes all the tax exemptions for education and health that have been implemented for several years. It will no longer be possible for a married employee to have exemptions for the education of his wife and children or any health care and social care expenses for members of his family.

  If you earn less than 8,000 JDs per year you are exempted from the income tax, which sounds good since the previous exemption was for 6,000 JDs. Actually, a monthly income of 500.0 JDs is becoming the realistic line for poverty in Jordan and it is a pro-poor policy to exempt annual incomes less than 8,000 JDs.

 The burden will be diverted to the middle class and not the upper class. An income tax of 10% (instead of 5% in the previous law) will be enforced on annual incomes ranging from 8,000 to 13,999 JDs. This is made more drastic with the removal of all exemptions for education and social care. Incomes of 14,000 JDs and above will be subjected to a 20% income tax.  

  The law has been drafted with a clear flavor of ruthless market economies and private sector interests. The law abolishes all exemptions that were given for non-profit organizations for the sake of "balanced market competition" with the private sector. It is not clear yet how this law will affect the small-scale socio-economic projects that cannot compete fairly with the private sector but is now subjected to income taxes as well. The law also provides a direct and final blow for the agricultural sector in Jordan by forcing a 50% income tax on all profits from agricultural activities.

  The law has been very "sensitive" and generous with the "struggles" of the private sector in Jordan, lowering down the income tax on corporates and firm to the lower limit of 15%.  The industrial corporates will not benefit since it will pay the same 15% it used to pay, while the "trade companies" will benefit by reducing the tax from 25% to 15% and this is another blow for the productive "industry sector" that needs to be supported.

  Another sector of direct impact will be the pension salaries which will be subjected to the 10% income tax after being totally exempted.

  This law is anti-social, non-democratic in nature and contradicts many national policies and strategies in Jordan, especially our aspiration to move into a "knowledge economy" and a "knowledge society" whose main base is education. Moreover, the law will increase the day-to-day sufferings and struggles of the Middle Class and reduce its dynamic contribution to sustainable development in Jordan.

  The problem is exacerbated with the fact that all civil society institutions that have voiced strong resistance to the law have no clear channels to engage in the decision-making process which lies now within the Majlis Al-A3ian and the government and both are non-elected bodies.