The Kingdom of Jordan economy suffocates. Last Wednesday, the government proposed a new law aiming at increasing taxes on employees (+5%) and on companies (+20-40%), as a new series of IMF-backed measures. The government and unions did not reach an agreement on revoking the income tax, and protesters took to the streets on Saturday and Sound. More than 3000 protesters tried to gather next the Prime minister’s office in Amman, as hundreds of other march in smaller cities across the kingdom, shouting slogans as “We will not kneel”, “The ones raising prices want to burn the country” or “This Jordan is our Jordan, Mulki should leave”. The main union leader, Ali Obus, claimed the “maintain Jordan’s independence and not bow to IMF demands”.
These new taxes are the price to pay after the three-year credit line ($723 millions) granted by the International Monetary Fund two years ago. Previous measures passed by Hani al-Mulki’s government have already reduced the purchasing power with price hikes on basic food (+50-100% during the last months). On Sunday night, King Abdullah II called for “a reasonable national dialogue” on the tax issue: “It would not be fair that the citizen alone bears the burden of financial reforms”. But Jordan’ will need more than good intentions to find solutions to this economic crisis that deeply threatens its political stability.
Today, Jordan’s King Abdullah is likely to ask Prime Minister Hani Mulki to resign, said sources who assigned the reason for such a drastic measure as one designed to soothe flaming anger of Mulki’s economic policies which have sparked some of the largest protests Jordan has seen in years. According to sources familiar with the matter at hand, King Abdullah had ordered Mulki for an audience in his palace scheduled for later today.
A pro-business politician, Mulki, was appointed as Prime Minister in Mat 2016 and was charged with the responsibility of reviving Jordan’s slow-paced economy. Business sentiment in the country had been hit by the turmoil in the region.
Primarily there have been two factors that have played a significant role in the demand for Mulki’s ouster. The imposition of a steep hike in general sales tax earlier this year was highly unpopular and acted as a bedrock for the more unpopular move of slashing bread subsidies – a staple food for the impoverished masses. Critics of the tax bill say, rescinding the bill is necessary since it effectively lowers living standards.
In recent years, the country’s economy has been sluggish due to chronic deficits of private foreign capital; the flow of aids have also diminished. According to economists and politicians, the IMF-backed economic proposals have only worsened the plight of the poor while squeezing the middle class.