Omar Obeidat, The Jordan Times

AMMAN –– Industrialists fear proposed changes to the Income Tax Law, which may carry higher levies, will exacerbate their already fuming problems.

At a seminar on the sidelines of the fourth forum and exhibition for national industries, held Sunday, leading economists and sector representatives discussed the challenges holding back Jordanian manufacturing companies.

They also addressed the impact of the impending hike in electricity tariffs.

Chairman of the Jordan Exporters Association Omar Abu Wishah said a new income tax law with higher taxes on industry –– currently being debated by the Lower House Financial Committee –– would be “destructive for the sector and all successful businesses in the country”.

Fathi Jaghbeir, president of the Small and Medium Enterprises Association (Jordan SMEs), blamed policy makers for not consulting the private sector when drafting changes to the existing sales and income tax temporary law.

Rapporteur of the Lower House Financial and Economic Committee MP Nasser Qaisi said in previous remarks to The Jordan Times that amendments to the legislation would include increasing tax rates on large firms, particularly banks, telecom operators and mining companies.

But industrialists are worried that the amendments could include medium-sized establishments, which are facing several problems related to the credit crunch and high production costs due to expensive energy prices.

“We [industrialists] have a feeling that decision makers are intentionally ignoring our worries. The government never considers the consequences of its decisions,” Jaghbeir charged.

He also criticised the government’s plan to increase electricity tariffs, a move that may push many businesses to close down or move to other countries.

The industrialist voiced fears the planned tax law may send the sector into a deeper slowdown.

Former finance minister Mohammad Abu Hammour said he was in favour of reducing tax rates on the private sector as it proved to generate more revenues for the government.

He cited the government’s decision in early 2010 when it slashed tax rates on large- and medium-sized firms, saying that tax officials were expecting such a decision to cut tax revenues by JD200 million but it helped boost revenues by 6 per cent at that time.

“Cutting tax rates enables businesses and the economy to expand and help curb tax evasion,” Abu Hammour said.

Former deputy prime minister Mohammad Halaiqa cited the legislative branch as a major problem for the private sector in the Kingdom, describing meetings between officials and businesspeople to discuss economic issues as “mere protocol”.

The private sector still has no role in participating in the legislative process, Halaiqa said, expressing hope the proposed tax law would not cause further difficulties to businesses.

Director General of the Jordan Chamber of Industry Maher Mahrouq underlined the issue of short-lived governments in Jordan as a major obstacle hindering real cooperation between public and private sectors.

“Over the past three years I personally have dealt with seven labour ministers to solve problems related to the labour force,” Mahrouq said, adding the industrial sector should be given extra attention by authorities as it is the largest employer in the country.

Mahrouq indicated that while the average number of employees working for a single factory is 14.7, in other sectors it is only three people, noting that the industrial sector attracted around 70 per cent of overall investments in the Kingdom last year.

Mahrouq also mentioned that industrial establishments undergo inspection and monitoring by 16 government agencies, an issue that puts more costs on factories and leads to unclear monitoring standards.

Referring to the “unfair competition” with products manufactured in neighbouring countries that offer energy and tax support to industries, Abu Wishah called on authorities to leave the sector grow by facilitating the work of the private sector.