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Rami Olwan

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Mobile operators in Jordan decry proposed tax on phone calls PDF Print E-mail
Written by Mohammad Ghazal, Jordan Times   
Friday, 09 January 2009 13:15

Mobile operators on Wednesday decried the Lower House's endorsement of a tax on phone calls saying it was "unfair" to the telecom industry, while economists described the decision as irrational.

Deputies yesterday endorsed the 2008 livestock protection fund draft law, which entails imposing a one-fils tax on each minute of a mobile or landline phone call, saying it is meant to support the livestock sector by facilitating farmers' access to low-interest loans.

Three out of the Kingdom's four mobile operators said the law, if implemented, would increase the financial burden on end-users and negatively impact the telecom sector, which already contributes to the treasury.

Zain General Manager Ahmad Al Shatti said the new tax would also cause chaos in the local telecommunications market.

Currently, taxes constitute 20.5 per cent of subscribers' bills, in addition to an annual JD1 university tax per line, according to Shatti.

In addition to the 16 per cent sales tax and 4.5 per cent special tax, around 10 per cent of local operator's revenues go to the treasury, he said, adding that they also pay 25 per cent of their total profits to the treasury, as well as contribute indirectly through the income tax paid by their employees.

A Jordan Telecom Group (JTG)Jordan Telecom Group (JTG) source said the draft law is unjust as it forces a highly efficient sector to support a highly inefficient one.

"This decision is illogical and it is almost impossible to implement it practically and technically speaking. It will cause confusion in the market," the JTG source told The Jordan Times yesterday.

For example, around 20 per cent of mobile subscribers use offers that grant them unlimited minutes in return for a fixed amount per month, the source noted, adding that the number of customers using such offers is increasing rapidly, which makes it impossible to implement such a decision.

Umniah officials also expressed dismay over the bill.

"If the law goes into effect it will affect the sector's growth and contribution to the national economy as a whole," a source at Umniah said, pointing out that the telecom sector enjoys an added value of 80-90 per cent and such a decision would negatively affect this value, the Umniah source said.

"There are already many taxes in the sector and adding a new one will make investors think twice about expanding their investments in Jordan or even bidding for the 3G licence to be floated by the government."

Officials from Xpress, the Kingdom's fourth mobile service provider, were not available to comment despite several attempts by The Jordan Times.

Meanwhile, economists shared the mobile operators' concerns.

"This is really a wrong, irrational, unacceptable, unstudied and seriously stupid decision," said economist Yusuf Mansur.

He noted that the decision supports one sector at the expense of another, which is economically not acceptable.

"The telecom sector is highly regulated and enjoys proper competition, while the livestock sector is 100 per cent monopoly. This is unfair for the telecom sector because it means the good guys will pay for the bad guys," he told The Jordan Times yesterday.

Jordanians currently pay 82 types of taxes and 100 kinds of fees, according to Mansur, who added that the new tax will eventually increase mobile and telephone bills.

Economist Fahed Fanek echoed similar remarks.

"The decision is wrong, financially and economically. It is wrong to impose a tax on one sector to subsidise another, as subsidies should come from the overall revenues of all taxes," Fanek said.

"One fils might seem a small amount, but at the end it is a very high amount. It is simply a bad decision," he added.

A recent survey by the Department of Statistics indicated that 94 per cent of Jordanian households owned mobile phones in 2008, while three quarters of them had more than one mobile line.

It also revealed that 42 per cent of Jordanian families had fixed-line telephones last year.



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Last Updated on Friday, 09 January 2009 13:27