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Ammon News - Industrialists said on Sunday that a government plan to reduce customs duties to about 5%, in order to combat evasion or avoidance, "will not work," stressing that an ideal tariff is the one that guarantees a continuous flow of government revenue on the one hand and protects the local industry on the other.

This came in a paper that the Amman Chamber of Industry on Sunday presented to the members of the Financial and Economic Committee in the Senate. According to the paper, the contribution of customs revenues to the GDP in the period 2000-2020 decreased to 0.8 percent from 4.3 percent after the customs tariff was reduced as a result of Jordan's ratification of several international trade agreements.

The Amman Chamber of Industry said that the real burden on the citizen is the sales tax, not customs duties, calling for a reduction in sales tax on basic commodities.

According to the chamber, the customs revenue is about JD255 million, or 9.0 percent of the total consumption of the Jordanian economy, which means, according to the chamber, that reducing the tariff or even canceling it will not have a tangible impact on the economy, because it will not cause a shock on the demand side.

The paper cited household expenses and income accounts, which indicate that 51 percent of Jordanian families, whose monthly income ranges between JD237-JD752, pay between JD0.08 - JD0.96 per month as customs duties on consumed goods, while paying JD86-JD200 per month as sales tax on the same consumed goods.

The Chamber said that when the government reduced customs duties on clothing and footwear in 2016, the price index in this sub-sector rose by 3.2 points after 6 months, which confirms that the reduction was not reflected in the final prices due to demand and supply in other markets.