27 June 2016
AMMAN -- The industrial and trade sectors are split over the recent cancellation of an earlier Cabinet decision to reduce sales tax on clothes.

But both sectors agreed that the government's decision-making process was "arbitrary". 

The Cabinet recently cancelled an August 2015 decision which reduced sales tax on clothes, bags, watches, perfume, jewellery, toys and cosmetics from 16 to 8 per cent, and lowered customs duties on these products by between 5 and 30 per cent.

"The government never consults us when it takes a decision that directly affects the sector," said Amman Chamber of Commerce (ACC) Vice Chairman Ghassan Kherfan, describing the recent decision as "impromptu".

"The move will cause a state of confusion in the market, especially for those who have already ordered their commodities based on the old tax rate," he told The Jordan Times on Sunday.

Although the decision to cancel the tax reductions will not go into effect until after Eid Al Fitr, in the first week of July, Kherfan noted that it would prompt traders to hide new clothes and sell old ones to make up for the losses.

"Our problem with the government lies in the fact that it never considers our opinion in matters related to our sector. We need constructive dialogue to examine the consequences of every decision," he said.

On the other hand, representatives of the industrial sector praised the new decision, describing it as "positive by all standards".

"The decision is very beneficial for the local industries that were harmed by the reduction in customs and tax fees. Some of the industries, particularly shoes, were on the verge of closing down," said Musa Saket, a board member of the Amman Chamber of Industry (ACI).

He noted that local industries face tremendous challenges that stand in the way of their competitiveness.

Nevertheless, Saket criticised the government for "not sitting with the private sector before taking such a decision".

"It is unacceptable to learn about these resolutions from the newspapers. The government keeps claiming that it is committed to the partnership with the private sector, but that is not what we see on the ground," he charged.

There are around 1,385 industrial establishments working in textiles in Jordan with a capital of JD164 million.

The sector, which constitutes 3.7 per cent of total industrial investments in the Kingdom, employs more than 55,000 workers, according to the ACI.

© Jordan Times 2016