April 6, 2008

Supporting the local industries and protecting our products

The Government is expected to exempt renewable and energy conserving devices from custom taxes and waive the 16% sales tax. For the Solar water heaters, wind systems and other energy-saving the incentives where already been implemented, since the begining of this year.

I hope that the industrial leaders and citizens are aware of the importance of "energy savings, or environmental awarness," but, they are already suffering from the high cost of operations and production leaving "the environment care" behind their concerns.

In a small country with small consumption rates and purchasing power and few factories and manufacturing, caring about the environment and speaking about "energy savings", " renewable energy" becomes only sort of a " Trendy" movement toward some fake strategies, unless it's been implemented the right way and taking into considerations the economical challengies and production competitiveness that we suffer to even achive.

Shouldn't the industry leaders fight for exempting all imports for Manufacturing inputs from taxes and sales, and imposing tarrifs on imported products that compete with the locally produced products? Implementing a protection strategy for the locally manufactured products to become more competitive! Our competitive advantage is diminishing due to the progressive increase in the inflation rates, high increase in production cost, and transfer of talented minds to serve the economy of other countries.

In summary, the proposed strategy is to exempt the imported raw materials and all the manufacturing inputs from taxes while imposing more taxes on the imported final products that compete with the local manufactured products.

Related Posts:
Renewable energy devices to be tax deducted ... not enough

AMMAN (JT)- Instructions governing a March government decision to exempt renewable energy and energy-conserving devices from customs duties are expected to be published next week, an official said.
Meanwhile, the government is expected to cancel the 16 per cent sales tax, a move, industry leaders said, which would encourage consumers to adopt the new devices.

In order to address the Kingdom’s energy crunch and to assist the move to energy-saving practices and responding to calls from the industry, the government took the exemption decision and published it in the Official Gazzette last month.

The measure comes in line with the Kingdom's energy strategy which seeks to increase dependence on local energy sources from the current 4 per cent to 25 per cent by 2015, and up to 39 per cent by 2020.

But full implementation and exact measures are to be unveiled next week, according to National Energy Research Centre (NERC) President Malek Kabariti.

Solar water heaters, wind systems and other energy-saving devices have all been exempted from customs duties and will soon be free of sales tax, he added.

“It was not easy to pass, but we came to an agreement that will be beneficial to both the industry and the people,” Kabariti told The Jordan Times.

Although the measure has yet to be implemented in full, the effects can already be seen, according to Ayman Maaitah, solar energy specialist and CEO of Millennium Energy Industries.

“This difference is huge, we have already reduced prices by 20 per cent or more.”

“It was supposed to be exempted of all customs duties and taxes, but till now, we have to pay sales tax,” Maaitah lamented, adding that the sector has received verbal promises from the government that the sales tax will be exempted soon.

A wider use of solar energy and other energy-saving devices have the potential to save the Kingdom's energy consumption by 25-50 per cent, according to experts in the sector.

The technology had been subject to 16 per cent sales tax and 23 per cent customs, which passed along a 40 per cent price increase on to consumers.

With full exemptions, the price of a solar-generated water heater will be reduced from JD500 to JD350, while solar energy for home heating, which currently costs JD10-15 per square metre, will drop by 20 per cent.

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