Jordanian Prime Minister Hani al-Mulki resigned on Monday amid widespread anger over IMF-backed price increases and a new tax reform law.
His resignation follows days of protests over the government’s economic policies.
The demonstrations were organised by an independent group known as Hirak Shababi, or youth movement, as well as 33 of Jordan’s professional associations and civil society groups. They include Jordan’s Engineers Association and Jordanian Teachers Syndicate – both groups are the biggest in the kingdom with an estimated combined membership of 300,000.
Despite Mulki’s resignation – seen as a move aimed at defusing anger over the economic policies – protesters have vowed to continue their demonstrations.
They are demanding the government scrap the new tax law and many are calling for a complete overhaul of its approach to economic and social policies.
Here’s what we know so far:
What is the proposed tax?
- The new law – which still must be approved by parliament – will increase the percentage of citizens who will be taxed from 4.5 to 10 percent.
- It will lower the taxable income for a family from $34,000 to $22,500 and for an individual from $17,000 to $11,200.
- The law proposes raising tax rates for banks from 35 to 40 percent.
- It will increase government revenue to between $350m and $430m by 2020-2021, according to Mousa al-Tarawneh, spokesman for the income and sales tax department.
- The law will combat tax evasion across all sectors which, according to government figures, amounts to about $800m a year.
- The law will also reclassify tax evasion from a criminal misdemeanor to a felony.
- The government asserts that 90 percent of Jordanian citizens will pay taxes because of their poverty rate and family exemptions.
- It also maintains the increase is needed for the annual interest of about $1.5bn it pays to service its nearly $40bn debt, according to economic journalist Salameh Derrawi Jordan.
- The government has been borrowing more expensive loans to pay for older loans.
- Because parliament is not in session, King Abdullah II must call parliament to convene an exceptional session to discuss the law.
What do critics say?
- Critics of the law argue the government has already been taxing Jordanians in many other ways, including a 16 percent sales tax on goods and services, and has raised the prices of bread, fuel, electricity and other commodities.
- The government has changed the income tax law four times in the past eight years.
- Earlier this year, it imposed a 50-100 percent tax increase on key food staples in an effort to decrease its $700m budget deficit.
- Critics say the government is not spending enough resources on critical sectors such as education and healthcare to justify paying higher taxes.
- Jordan’s political model has historically been dependent on foreign aid, which explains its under-taxed system of government. However, that model, critics point out, has led to corruption and a lack of accountability.
- At least 80 of Jordan’s 130 members of parliament have signed a statement pledging not to support the law.
- Government spokesman Mohamad al-Momani told local news outlets last week the government will not withdraw the law and will ask parliament members to pass it.
- Critics also point out the government has failed to crack down on endemic corruption in its ranks or recover more than $1bn allegedly embezzled or wasted from state coffers.
What are protesters demanding?
- Demonstrators accuse the government of covering up its failed economic policies through the introduction of the new income tax legislation.
- Protesters have also slammed politicians for squandering public funds and corruption.
- Many protesters are also demanding the dissolution of parliament, and want a change in the current political system making it more accountable to the public.
- Prior to Mulki’s resignation, unions representing tens of thousands of employees in both the public and private sectors also called for a general strike on Wednesday after their demands for the bill to be scrapped were rejected by the government.
How has the government responded?
King Abdullah II accepted Muliki’s resignation on Monday.
Omar al-Razzaz, the education minister, was tasked with forming a new government.
Razzaz, a former World Bank economist, is described as a more “likable” and “accepted” character among the Jordanian people.
In a sign the tax hikes could be shelved, state-run Petra news agency, citing the speaker of parliament, said lawmakers were on course to ask the king’s permission to hold an emergency parliamentary session with a majority demanding the legislation be withdrawn.
With reporting by Ali Younes: @Ali_reports
SOURCE: Al Jazeera and news agencies