Concerns Over Electric Car Tax Increase in Jordan
The recent decision by the Jordanian government to raise taxes on electric vehicles has sparked significant concerns within the automotive sector. Effective immediately, the new tax structure imposes a 10% tax on electric cars valued under 10,000 dinars ($14,110), a 40% tax on those priced between 10,000 and 25,000 dinars ($35,271), and a steep 55% tax on vehicles exceeding 25,000 dinars. This change comes as a response to a growing trend among Jordanians towards electric vehicles, largely due to their cost-effectiveness and lower running costs compared to gasoline-powered cars.
Since the tax hike was announced, the market has seen a complete halt in electric car sales. According to Sharaf Al-Din Al-Rifai, Vice President of the Free Zones Investors Authority, no customs clearances have been processed for electric cars in the affected price brackets. Previously, the free zone experienced a daily clearance of 4,000 electric vehicles, a figure that has now plummeted to zero. Al-Rifai expressed hopes that the new government, led by Dr. Jaafar Hassan, would reconsider the tax increase to revive the sector.
Government's Justification and Future Outlook
The Jordanian government has defended its decision, stating that the tax adjustments aim to balance the market between electric and gasoline vehicles while protecting investors in the automotive industry. Mohammad Al-Momani, the Minister of State for Government Communication, emphasized that the government is open to dialogue and will assess the impact of these changes over time. However, economic experts warn that the abrupt tax increase contradicts earlier assurances of no new taxes and could lead to reduced demand for electric vehicles.
In 2023, the demand for electric cars surged by 122% in the first quarter compared to the previous year, driven by rising fuel costs. The recent tax hikes could reverse this trend, leaving consumers with limited options as the prices of gasoline vehicles remain high. Industry analysts predict that unless the government acts quickly to amend the tax structure, the electric vehicle market in Jordan may face a prolonged downturn, affecting both consumers and automotive dealers alike.
