New taxes, rising prices, nationwide resentment [Archives:2004/699/Business & Economy]

January 1 2004

Mohammed bin Sallam
Law No.42 for the year 2003 was issued on Saturday concerning sales tax that would include whatever sold or bought of goods whether products of national industry or imported from abroad.
In response to that the Chamber of Commerce and Industry in the capital secretariat had called for posting the law for a period of ten years and to stop issuing any laws or legislations contributing that would help increase smuggling and spread of corruption phenomenon. A statement it distributed Saturday the Chamber said the general sales tax was already and in the law represented a burden the cost of which the consumer who would suffer from the rise of prices I an amount parallel to the amount of the tax.
On the other hand the ''The one-million citizen committee for abolishing the sales tax'', scheduled to be implemented at the beginning of next July, was declared on Tuesday. In the declaration statement the committee said the law aimed at adding further burdens on the national production and consumer commodities after lifting the government subsidy on many of basic goods, adding that the law would create an economic crisis embodied by stagnation and its outcomes would be aspects of bankruptcy and spread of the phenomenon of unemployment. The committee proposed further for effecting serious reforms of the existing taxation mechanism for achieving more profits, stressing that the present mechanisms are outdated and fraught with big corruption, as mentioned in official reports and by international organisations.
Pursuant to press statements of coordinator of the anti-law of sales tax committee lawyer Yassin Abdulrazzaq, he committee would begin its work beginning of January by collecting one million signatures by citizens addressing the president of the republic for abolishing the law and would hold workshops attended by businessmen and journalists writing in legal affairs, refuting that the committee would work for submitting a law suit to the Supreme Court on non-constitutionality of the law despite of its many shortcomings.
It is to be recalled that the results of a symposium on the sales tax held in February 2000 had emphasized the necessity of launching an intensive awareness campaign ahead of issuance of the law targeting the relevant establishments. The results also called for improving performance and development of taxation administration and efficiency of collecting taxes as well as high qualification and continuous training for financial and accountancy cadres and founding a practical mechanism capable of ending smuggling.
In the same context economic observers considered more probable the government intention of inaugurating a new price dose in 20o4 of which the unexpected rise in prices of some essential commodities such as corn, flour and rice as a probe of the people response, who got used to quiet resentment and then accepting doses tightening the grip and increasing misery of living conditions. Government justifications about the sudden increase in prices have revealed a state of contradiction. Such as those by the minister of trade and industry in mid last week as saying “the rise is temporary resulting from shortage of the two commodities in the Yemeni market.'' Economic observers have been skeptical of the government justifications under the absence of clear indications for the price rise in the markets as some other commodities, other than corn and flour, have also been raised such as broil eggs, milk, rice, cooking oils and poultry and others. For instance the price of broil eggs tray that are not imported from outside jumped from YR 280 to YR 400. Economists have queried about the strategic stockpile that is supposed to be available to encounter such problems, if the government was telling the truth about the existence of a shortage in quantities of corn and flour in the Yemeni market. While failure overshadows the parliament in practicing it monitoring role, chairmanship of the parliament last week forwarded the issue of price rise to the committee of trade and industry to follow up the question with the government concerned parties and to present its report.
On the other hand the Mithaq newspaper, organ of the GPC ruling party mentioned in its issue dated 29 December that during the year 2004 the government would send to the parliament and the Shura Council a complete program containing a bunch of reforms such as restructuring scale of salaries and wages of all employees in government, mixed, military and security sectors with the aim of improving the living conditions of members of those sectors.
The newspaper added that the group of reforms also would stipulate essential modifications in taxes and customs structure in the way effecting the required balance in this field, in addition to amendments meant for realizing a balance between the value of prices and services in order to rectify cases of confusion and imbalance in market relations.