Jordan's tax revenues at $2 bln a economy struggles

Jordan’s tax revenues at $2 bln a economy struggles

Jordan suffers from its worst economic downturn in a decade.

July 21, 2010 9:16 by Reuters

Jordan’s tax revenues rose 1.8 percent to 1.428 billion dinars ($2 bln) in H1 2010 compared to the same period last year as the economy continues to suffer its worst downturn in a decade, official data showed on Tuesday.

Officials say total taxes – corporate and sales tax – had been expected to rise at a faster pace but healthy growth projections have been slashed due to weak domestic demand and lower profitability by the country’s top firms.

The government had announced last month the second round of tax hikes this year to offset stagnant revenues reeling from the double impact of the global downturn and recent major tax breaks to spur investments and domestic consumption.

Last year the aid-dependent country ran up a record budget deficit of 1.45 billion dinars ($2 bln) or 9 percent of GDP, much bigger than expected, as public finances came under strain after the global downturn hurt domestic demand and foreign cash flows, including remittances from expatriates in the Gulf.

Top economic policymakers pin their hopes of boosting revenues on an improved business climate that attracts more capital inflows but the IMF has downgraded projections for growth this year to 3.5 percent from 4 percent.

(Writing by Suleiman al-Khalidi; Editing by Ron Askew)