An analysis of data from the General Customs Department shows a rise in market share of petrol-powered cars; this started with the removal of the exemption on hybrid cars, and the increase in the special tax rate on these vehicles.
The share of petrol-powered cars in the total number of imported or registered vehicles increased from about a quarter (27%) in 2018 to almost half (47%) in 2021.
Although the customs duty collected on hybrid vehicles has increased since 2016, the last two years have witnessed a decline in the share of this category of cars in favor of petrol-powered cars.
The percentage of customs cleared Hybrid vehicles in Jordan decreased to 43% in 2021, compared to 54% in 2019.
Tax Increase, Revenue Decline
In 2018, then-Finance Minister Omar Malhas said that it was difficult to reverse the reduction of the hybrid vehicle customs tax exemption, as opposed to other alternatives, because the move had not achieved the desired returns for the government, according to local media.
Jihad Abu Nasser, representative of the automotive sector in the Free Zones Investors Authority, says he believes that the tax increase imposed on clearing hybrid vehicles was based on the government's mistaken expectations that its customs revenues would increase as a result of the new customs tariff imposed on hybrid vehicles when the earlier exemptions were reversed. But that decision resulted in a decline in tax revenues imposed on this type of vehicles.
An analysis of data from the Jordan Customs Department reveals a significant decline in customs clearance revenues on hybrid vehicles starting from 2019, a year that saw an increase in duty paid on those vehicles. This coincided with a decline in the number of customs cleared vehicles of this same category.
Hybrid car customs clearance revenues improved in 2021, but they remained lower than their levels recorded before 2018.
Abu Nasser explained that although the customs clearance revenue from hybrid vehicles has decreased compared to petrol-powered vehicles, the customs duty paid on hybrids has been higher due to their higher prices.
Environmental Hazards
Carbon dioxide emissions from hybrid vehicles are low, and these cars do not need additional infrastructure requirements to run them on the roads of Jordan as they are self charging.
According to a study published this year by the World Bank Group, Jordan's transport-related greenhouse gas emissions has increased by more than 20% between 2016 and 2021. These emissions have cost the national economy between JOD 272 and 545.7 millions according to the study.
Environmental expert Mohamed Hamed says he believes that encouraging the consumer to use hybrid cars was a step towards transitioning away from internal combustion engines.
He says that the coming years will see a shift towards electric cars.
Hamed underscores that the complete transition to electric vehicles requires the development of clear plans and policies, leading to a complete ban on the use of internal combustion vehicles.
Government Revenue from Hybrid Vehicle Clearance*
Vehicle Valued at JOD 10,000*
Source: The graphic relies on special tax rate per annum
Electrification and the Coming Transformation
Strategic planning expert Mohamed Asfour explains that Jordan has tended to reduce the use of fossil fuel-based vehicles by exempting hybrid vehicles from paying customs import duty. However, reversing this decision creates a sense of imbalance in dealing with this matter, according to Asfour.
He pointed to the importance of stabilizing government policies and laws affecting the economy and taking into account the interests of all, which contributes to encouraging investment and commercial activities.
Asfour also stresses the need for a comprehensive plan to shift towards electric transport while ensuring market stability in the coming years.
The demand for electric cars has increased at the beginning of this year due to the rise in fuel prices; the number of electric-powered cars that have cleared customs has doubled during that period.
The government's move to electrification was evident in 2019, when it issued a decision to reduce its taxes on electric vehicles.
However, progress in the provision of electrical charging points infrastructure has been slow compared to the number of electric vehicles on the roads in Jordan; this hampers any increase in future acquisition, according to the World Bank's Jordan Public Transport Diagnostic and Recommendations issued last year.
At the same time, the government has continued to raise its special taxes imposed on hybrid vehicles which has increased earlier this year by 10%, bringing the total taxes imposed on this category of vehicles to 55%.
Waleed Mohamed, a taxi driver, bought a petrol-powered car in 2018 because hybrid cars were more expensive to purchase not to mention the after sale service and spare parts, that cost more in comparison to the fuel powered cars.
Waleed is not currently thinking to buy an electric car. He is already suffering from higher fuel prices, and a higher commission imposed on his business ourput activities by the online transport companies he works for.
Waleed explains that many issues continue to challenge any migration plan to own an electric vehicle, like the scarcity of electric cars spare parts, and the unavailability of charging points, despite the fact that those vehicles have become popular and available in the market in greater numbers.
Walid is concerned for what he describes as sudden decisions issued by the government. "We, as citizens of this country, are failing to anticipate what are the plans of our government. No one takes risks anymore for fear of being surprised by decisions that were not thought through," Waleed said bitterly.