Public Roar over Sales Tax InflamesCrisis between Opposition and Government [Archives:2005/826/Front Page]

March 21 2005

By Yasser al-Mayasi
& Mohammed al-Qadhi
Yemen Times Staff

A sales taxes law, originally made in 2001 but only being implemented now, is leading to massive demonstrations, and political crisis between the government and opposition parties.The public roar over the sales tax law that is going to be put into practice next July has turned into a media barrage battle and a crisis between both the government and the opposition coalition as the government and its media has escalated its ruthless attack against the opposition parties, holding them accountable of the riots that took place in various governorates simultaneously which the opposition considered a public's reaction to the skyrocketing of the basic commodities and the 10% sales tax to be levied, leaving more than 50% of the population economically vulnerable.

Accusations between the ruling party and opposition parties have also led to state-run newspapers waging a media campaign against the opposition parties.

This followed a statement issued by the Ministry of Interior saying that the joint meeting parties are behind the violent acts accompanying demonstrations, and that the Islah Party is the primary problem.

The statement confirmed that some prosessions were not licensed by the security authorities, and that some detained elements involved in the violent acts are still being investigated.

In their meeting March 17, the joint meeting parties said the accusations are groundless.

One source said opposition parties had warned about consequences of these policies. The source added that the financial and administrative corruption reflect failure of the ruling party.

The source emphasized that the joint meeting parties usually stand by citizens, defend their rights and encourage them to express their opinions according to the constitution and the law, and in a peaceful ways in order not leave a gap for chaos sparkers and crisis makers since this would be an opportunity for corrupt officials to protect their wrong policies.

In a statement issued March 18, the ruling People's General Congress called all citizens to be alert and not give a chance to malicious elements in the society to cause violence. The ruling party asserted that Islah and the other opposition parties disclosed their malignant plans that targeted security of people.

The statement mentioned that security investigations conducted have already disclosed that opposition parties were involved in fomenting violence. It added that these parties have malicious intentions to threaten security and stability of the nation particularly after they failed through democracy and dialog.

Meanwhile, Al-Thawrah Daily and September 26 Weekly waged an unprecedented media campaign against the joint meeting parties. In its editorial, the former described the opposition parties as opportunists who devote their efforts to sparking violence and instigating citizens to attack public properties. It accused the opposition parties of being rebellious, violating the principles of democracy and therefore they should not be cooperated with under any circumstances.

September 26 accused those standing behind the demonstrations of being extremists, as they do not respect the democratic values, rather, they employ democracy to harm the political life.

It added that the parties involved in the late violent acts should be referred to court according to the law of parties and political organizations, stipulating that any party attempting to threaten the security and the regime of the country should be sanctioned.

The state-run and the opposition newspapers as well the internet websites found themselves in a battle that changed from demonstrations and protests against sales taxes into exchanged political accusations targeting each other.

On-Going Debate over Merits and Demerits

The debate over the merits and demerits of the law has been going on. While businessmen are very critical to the sales tax law, government officials claim that the law would not target the ordinary people but only 1500 big businessmen and that it would reduce the tax evasion caused by smuggled commodities

The Trade and Commerce Chambers already demanded the cancellation or amendment of this law in order to decrease the burden it would put on their business. claim that the target of this law will be the ordinary citizens whose purchase capacity will go down, raising the unemployment rate and causing economic stagnation.

“The law will put a heavy burden on the shoulders of the ordinary people. The reforms of the World Bank did not improve the economic situations, boosting investment, rather they just want to levy a lot of taxes which the people are unable to pay. Sales tax will reduce the purchase ability of the people whose income is almost 150%,” Hussein al-Zubairi, member of the TCC union said in a press conference.

Businessmen even warned that the contribution of the private sector in the development process will slow down, leading unemployment rise. “We as a private sector will not be directly affected as our role will be collecting taxes,” said a businessman, claiming the multi-taxation system will not provide an appropriate environment to investment and might push local investors to quit the country.

Some economists believe that the implementation of the sales tax will lead to a more moderate consumption, and encourage imports, increase government resources to support and finance basic development projects. They claim that one of the features of the law is to achieve a sense of fairness between national and imported products, exempting the basic services from taxes, encouraging investment, fighting tax-evasion, etc.

The Economic Reforms Program, implemented since 1995, argues that reformation of the taxation sector stipulates exemption of products and basic services in order to improve people's living standard. The law aims at including in the taxes the additional surcharges through which the state will generate about 25% of the general resources and about 5% of the GDP.

For more information on the news sales tax, see the Business page.