Tax is not new, it is part of Buildings and Establishments’ Law, says Water Ministry

By Maram Kayed – Sep 09,2020

‘All existing and new buildings in the Kingdom shall be subject to paying an annual contribution of 10 per cent of the net value of the estimated annual rent for buildings,’ stipulates Article 11 of draft water law of 2020 (JT file photo)

AMMAN — The draft of a new water law for the year 2020 has sparked widespread debate among citizens and experts after stipulating in its 11th Article that, for tax purposes, “all existing and new buildings in the Kingdom shall be subject to paying an annual contribution of 10 per cent of the net value of the estimated annual rent for buildings”.

The article only excludes places of worship from the tax.

“Why call it a contribution when it is simply a new tax? The government promised after the 2018 protests that resulted in the resignation of the Mulki government that there will be no new taxes, but this ‘contribution’ is obviously a new tax,” said Chairman of the Jordan Environmental Union Omar Shohan.

Shohan told The Jordan Times over the phone that the proposed tax has “several issues surrounding it”, among which is the fact that it will not be collected for the purposes of improving water or waste infrastructure. 

“The tax is collected but it is not stated anywhere that it will be used for the purposes of improving or rehabilitating anything water related,” he added.

Ministry of Water and Irrigation Spokesperson Omar Salameh stressed in a phone interview with The Jordan Times that the tax will not be sent to the Water Ministry’s budget but rather to the Ministry of Finance’s budget.

He added that “although the tax is listed under a draft of a water law, it will not be going into the water ministry’s budget”.

Salameh also noted that the tax is not a new one, as it is already a part of the Buildings and Establishments’ Law, although it currently stands at 3 per cent instead of 10 per cent.

The raise was justified by Salameh as it is linked to the rise in the cost of wastewater treatment, the maintenance of sewage plants, the price of chemicals used in water treatment and the increased cost of electricity.

Salameh added that the hike is related to the cost of linking buildings to sanitation services which costs between JD7,000 and JD12,000 per connection.

“In defence of the law, this contribution is a small amount that will not exceed JD30 to JD50 annually per house, paid only once,” said the ministry’s spokesperson.

However, Shohan, who is an environmental expert, said that the 7 per cent raise is “not a light matter”.

“In a country where unemployment is high, the purchasing power is low, the growth rate is almost unmentionable and the COVID-19 repercussions are heavy, any raise is unacceptable,” he added.

Meanwhile, the issue with the amount according to Shohan is that it depends on an estimation of each establishment’s annual rent, something he deemed as “very subjective and easily manipulated”.

Shohan claimed that the government, which is dealing with “ample debts” at the moment, is “trying to solve its budget shortage problems by increasing water and electricity taxes, so there is no guarantee that the rent estimations will not be blown out of proportion”.

The fact that buildings that are relieved from paying the Buildings and Establishments annual fees are not exempted from this tax is also a negative indicator, he added.

The ministry’s spokesperson said that at this stage, the law is only a draft which will be presented to Parliament soon, “so nothing is final yet”.

“Ultimately, while assessing whether they should approve or dismiss this tax, Parliament should keep in mind that this will take a toll on landlords, tenants and investors. The real estate sector cannot handle more taxes in the middle of a serious recession,” Shohan noted.

Citizens took to social media to voice their discontent with the draft law, the discussion of which trended on Twitter and Facebook.

“More taxes? Is it not enough that our water and electricity bills were suspiciously more than usual in the past three months? Do they think our landlords will pay this new tax or will we, a household that has no more than a JD1,000 income for its five members, pay it?” said Sama Rayyan, a dietician, on Twitter.

Luna Barakat, a student, voiced her discontent with the draft by saying that amidst the COVID-19 crisis, “no one can handle another government ploy to collect more money”.