Agricultural sector in Jordan: Moving towards the abyss?

Jordan

Published: 2018-03-07 17:44

Last Updated: 2018-03-07 18:42


(Jordan Times)
(Jordan Times)
Roya News Source


The Agriculture and Water Committee of the Lower House of Parliament resigned on Tuesday, during a meeting with the government and representatives of the farmers protesting the 10 percent agriculture tax that was introduced in January.

MP Khalid Hiyari announced the resignation by saying it came as a result of the government failing to respond to farmers’ demands to annul the new tax on agricultural inputs.

At the beginning of 2018, the cabinet announced the main features of the economic measures for the current year under what it called a “structural reform of the tax system’, which in their opinion aims to achieve stability and economic growth.

The agricultural sector was also targeted in the reform, and a 10 percent tax was imposed on both the inputs and outputs of the products of the sector.

During the month of January, farmers decided to protest against the government’s decision and to demand the annulment of the taxation. In the beginning of February farmers staged a sit-in in front of the Parliament for five days protesting the government's recent decision to increase taxes on agricultural products.

On Feb. 6, after an intervention by Hiyari which was requested by Acting Prime Minister Mamdouh Abbadi, the six-day sit-in was suspended under the promise PM Mulki would meet with the sector’s representatives with the intent to remove obstacles in the sector.

The Agriculture and Water Committee issued a statement following the protests saying it will continue with the demonstrations unless the government announces the annulment of the tax and threatened to escalate measures if the government does not reverse its decision.

By February rumors had spread that the agricultural tax was cancelled, but Hiyari denied them.

On Feb. 27, Hiyari announced the Cabinet had decided to only exempt agricultural outputs of the tax hike. Among the inputs still subject to the tax are live poultry and production inputs such as fertilizers, pesticides and veterinary medicines.

The government responded to the continuous demands by promising the farmers that a meeting with the International Monetary Fund (IMF) is to be organized to discuss the tax issue.

According to Hiyari, the government could not overturn the decision, as the IMF imposed the tax based on a comprehensive economic reform plan.

Up until the 2018 economic reform, inputs to agricultural production have either been tax exempt or subject to a four percent tax.

The agricultural sector has been in decline since the closure of Jordan's borders with Iraq and Syria. Conflicts in neighbouring countries have caused export to decrease and farmers fear the increased cost of production locally will incentivise imports, which will further stifle Jordanian agriculture.

As rumors spread in February reading that the tax on agricultural inputs and outputs was cancelled, Hiyari denied the news and said the tax was only canceled on the outputs but is still imposed on the inputs. Agricultural inputs include alive poultry and production inputs like fertilizers, pesticides and veterinary medicines.

The government responded to the continuous demands by promising the farmers that a meeting with the Monetary Fund is to be organized to discuss the tax issue.

According to Hiyari, the government can not turn back the decision, as the Monetary Fund imposed the tax based on a comprehensive economic reform plan.

The inputs of the agricultural and animal products used to be either exempted from taxes or subjected to a 4% tax imposition prior to 2018’s economic reforms.

The agricultural scene deteriorated since the conflicts sparked up in neighbouring countries, which were a source of importing and a chance for exporting.