June 7, 2018 / 10:19 AM / 6 months ago

Jordan's next PM says to drop tax bill that angered protesters

AMMAN/DUBAI (Reuters) - Jordan’s designated new prime minister said on Thursday he would drop a proposed tax law, conceding to a key demand of protesters who have already brought down the government.

Jordan's designated new prime minister Omar al-Razzaz meets with Union leaders in Amman, Jordan June 7, 2018. REUTERS/Ammar Awad

Omar al-Razzaz said there was a consensus to withdraw the income tax bill in comments to reporters after a meeting in parliament to consult on forming the new government.

Jordan’s biggest protests in years began eight days ago over tax increases and subsidy cuts pushed by the International Monetary Fund (IMF) to reduce the U.S. ally’s big public debt.

King Abdullah, often seen as a unifying figure in Jordan, on Tuesday called for new dialogue over the tax system after accepting the resignation of Razzaz’s predecessor, Hani Mulki.

Razzaz said on Thursday he would hold “broad consultations with civic bodies over a new tax system that will not trample on citizens’ rights”.

However, nightly protests have continued, with hundreds of people gathering in Amman and other cities to chant slogans calling for the tax bill to be withdrawn and the government to change. On Wednesday, some businesses closed in a strike.

Harvard-educated Razzaz, who served as education minister, has now started consultations to form a new government that can tackle Jordan’s profound economic challenges in an effort to revive confidence.

“The priority is to consult with the MPs, senate and unions, first over the draft income tax law,” Razzaz told reporters outside the parliament building after meeting the speaker. “We will hold many meetings and by the end of today, we will be able to reach a clear vision of the future.”

Razzaz hoped this would comfort Jordanians and pledged to listen to them. “We have to take immediate measures to return to the right path,” he added.

IMF REFORMS

Jordan is pushing fiscal consolidation measures required under an IMF financing program including tax increases and subsidy cuts that have weighed on poorer and middle class families.

Jordan will ask the IMF for more time to implement reforms after the wave of protests showed that pushing the country beyond its means risked instability, officials said.

In Washington, IMF spokesman Gerry Rice told reporters that the Fund welcomed King Abdullah’s call for a national dialogue on taxes. The IMF will work with Jordan’s new government to complete a program review as quickly as possible to release about $70 million in funding, he added.

An IMF mission to Jordan from May 20-31 had “productive discussions” toward this goal, Rice said adding that the Fund was concerned about the program’s “social dimension.”

“It’s critical that the benefits of costs and reforms are balanced, across all sectors of the economy, with a greater focus on those that have a greater capacity to pay, while protecting the most vulnerable,” Rice said. “At the same time, recent events also confirm the critical importance of bold reforms to address high unemployment, particularly among youth and women.”

Rice also repeated the IMF’s call for international donor countries to do more to help Jordan with funding grants to ease the fiscal strains of hosting more than 1 million Syrian refugees and high security costs.

Still, more than 1,000 charged protesters rallied well beyond midnight in the capital Amman shouting: “Bread, freedom, social justice.”

Several people fainted, and police said they took into custody a man who stabbed an officer. Security forces, who appeared to detain some demonstrators, blocked roads to stop the sea of people from marching to the cabinet office.

Some celebrated Mulki’s resignation as a victory and said they would wait to see if the new government would help stop price hikes.

For others, the troubles were much bigger. They called for more drastic changes to end years of government policies and corruption that have made life harder.

Slideshow (10 Images)

“I have been without work for almost two years,” Majdi Hamouri, 36, told Reuters. “We have nothing in this country .... It is my country and I love it, even if I die of hunger I won’t leave.”

Public frustration grew after the end of bread subsidies and a steep hike in the general sales tax this year, under an IMF plan to cut the Arab nation’s $37 billion debt.

The government has said it needs funds for public services and argues that the reforms would reduce social disparities. Protesters accuse the build up of the government’s policies of hitting the poor and squeezing the middle class.

Additional reporting by Angus McDowall in Beirut and David Lawder in Washington; Editing by Matthew Mpoke Bigg and Cynthia Osterman

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