Jordan- Gov’t promises more tax exemptions on food items

18 Jul 2011

(MENAFN – Jordan Times) Prime Minister Marouf Bakhit on Sunday said if the recent government decision to exempt basic food commodities from sales tax proves feasible in terms of lowering prices, more exemptions might follow.

Indicating that over the past weeks the government has exempted and lowered sales tax on 260 food items and services in a bid to reduce financial burdens on consumers, the premier told traders and importers as well as manufacturers that the government is ready to review the lists of items which benefited from the decision and to include more goods and services only if such decisions are reflected on prices in the local market.

Attending part of a meeting with private sector representatives, held at the Ministry of Industry and Trade, Bakhit, however, warned that the government will intervene in case foodstuff prices see what he called unjustified hikes, adding the government has the necessary tools to prevent such increases, particularly during Ramadan.

“The government will take all necessary measures to ensure that consumers purchase essential food commodities at reasonable prices,” he noted, urging consumers at the same time to rationalise their consumption during the fasting month.

According to official figures, food consumption during Ramadan goes up by 35 per cent to 50 per cent, particularly during the first 10 days of the month.

At the meeting, Bakhit was briefed by importers and traders on foodstuff reserves in the country.

Nael Kabariti, president of the Jordan Chamber of Commerce, indicated that strategic reserves of food items are enough for a period of more than six months, insisting that food prices in the local market are lower than in neighbouring countries and that local prices will not be affected by changes on international markets.

Voicing support for the government’s policy to prevent sit-ins and protests in commercial areas, Kabariti stressed that shop owners and traders complain that demonstrations have negatively affected their interests, particularly in downtown Amman, which witnesses protests every Friday.

The premier replied that although the government is committed to protecting the freedom of expression, it cannot allow harming the interests of people and businesses, saying that opposition groups and protest organisers should take into consideration the interests of people when selecting a venue for a rally.

Bakhit also listened to remarks and complaints by owners of supermarkets and importers of foodstuff, who urged for including other items in tax exemptions, such as certain types of fish and local table eggs, and to allow imports of red meat from other markets such as India.

But Mohammad Obeidat, president of the Consumers Protection Society (CPS), charged that traders and importers benefit from the sales tax exemption to generate higher profits without reflecting these exemptions on local prices.

“I support exempting food items from sales tax, which deprives the treasury of more revenues, but only if these exemptions directly result in cheaper prices,” he noted.

Obeidat, who was criticised by merchants and importers for his remarks, insisted that according to CPS studies, imported red meat prices in the local markets should be cheaper by 15 per cent to 20 per cent.

Minister of Industry and Trade Hani Mulki stressed that the decision to exempt basic food items from sales tax will be followed by other decisions if importers and merchants respond in consistency with to the main goal of the move, which aims to reduce food prices.

Mulki stated that the decision did not aim at reducing prices or keeping them stable during Ramadan only but instead to lower the cost of living in the long term.