Jordan's Prime Minister Omar al Razzaz said on Sunday the kingdom will pay a heavy price if parliament fails to approve new IMF-backed tax legislation. Razzaz told deputies who were debating the legislation that failure to approve the bill would mean the kingdom would have to pay even higher interest rates on its substantial foreign debt. Razzaz said the law promotes social justice by targeting the wealthy and combats long-time corporate tax evaders, but opposition deputies argue it will hurt the already stagnant economy and diminish middle-class incomes. The government sent the bill to parliament in September after withdrawing an earlier draft submitted by a previous government that triggered protests over the summer. Earlier this year, Jordan increased a general sales tax and scrapped a subsidy on bread as part of a three-year fiscal plan agreed with the International Monetary Fund, which aims to cut public debt of $37 billion, equivalent to 95 percent of gross domestic product. Rejection of the tax legislation would push even higher the cost of servicing over 1 billion dinars ($1.4 billion) of foreign debt due in 2019, raising the prospect of rating agencies downgrading Jordan's credit ratings, Razzaz said. “We will pay a heavy price if we don't approve this law,” he said.
