Measuring the Impact of the Increase in Indirect Taxes on the Industrial Sector that Increases the Prices of Economic Activities in the Jordanian Economy Using the Input-Output Model

Abstract

This study aimes to measure the impact of indirect taxes on the industrial sector that results in increasing prices of many economic activities, whether industrial or non-industrial in Jordanian economy by using Input-Output Model. The results show that by increasing Tax on production of one million (The state treasury receives one million dinars), it will lead to an increase in the value of the outputs of all sectors of the national economy by about 1.63 million dinars, but this increase is due to the increase in prices and not due to the increase in production quantities. The study also showed an increase in taxes on the products of one million on industrial sector (a million dinars in revenue for the state treasury), which will lead to an increase in the value of the outputs of all sectors of the national economy by about 1.57 million dinars. This is also due to the increase in prices and not by the increase in production quantities. The study also identified the most sensitive economic sectors due to the imposition more indirect taxes on the industrial sector. The study presented several recommendations, such as implementing studies on sectors other than industry, especially that high prices may negatively affect the competitiveness of economic sectors in foreign markets. This study is characterized by the application of the Input-Output Model in measuring the impact of taxes on prices rising in Jordan.