Social Justice in the Palestinian Income Tax Law # 17 of 2004 and the Jordanian Income Tax Law # 25 of 1964: A Comparative Study

This comparative study examined social justice in the Palestinian Income Tax Law # 17 of 2004 and the Jordanian Income Tax Law # 25 of 1964 in terms of legislation, tax categories and personal and family exemptions. The study fell into four chapters. The first chapter included an introduction to the study, its justifications, significance, methodology and literature review. The second chapter was devoted to the general context of taxation regimes and social justice. In the first section, the focus was on illustration of concepts related to tax systems. The section began with a definition of tax policy, one of the government's public financial policy instruments. This policy, in its turn, is one of the country's public economic policy instruments. It was found that there is a close relationship between the tax policy and the economic policies adopted in any country. The tax policy is considered one of the most important financial policy instruments to achieve the government's different goals: financial, economic, social and political. The law of the tax imposition nowadays is based on social solidarity theory. The essence of this theory is that the individuals of the society take for granted the existence of the state as a political as well as social necessity based on achievement of their supreme interests and satisfaction of their needs in different areas. The political organization structure of the state entails that social solidarity develop among members of a group in order to enable the country to finance its public expenditures in all spheres of life. To this end, every individual has to shoulder part of the burden by paying taxes according to capacity in solidarity with the other members of the society. However, this does not mean that the government's hand is free totally to impose taxes. It has to respect the basic rules when it comes to imposition and collection of taxes with the aim of achieving its various objectives for which the taxes are imposed, thus realizing social justice. Then, the second section moved to examination of social justice. The section specifically looked at capitalism (market economy) and Islamic economic thought partly because the Palestinian economy belongs to the market economy, in its general frame and partly because the religious reference is Islamic law. The concept of social values for justice in the Islamic economic thought is achieved through the principle of social solidarity and social balance whereas in capitalism (market economy), social justice is based on freeing the individual's hand to own، exploit and consume, leaving the market mechanisms and the interaction of supply and demand mechanisms (factors) to realize social justice to distribute the wealth of the society. This understanding encouraged democracy advocates to adopt the principle of relative equality to achieve social justice. To this end, they use different means such as imposition of taxes and enacting laws. Chapter three examined the reality of Jordanian Income Tax Law # 25 of 1964 and the amendments introduced to it between 1967-2004 in the frame of tax categories personal and family exemptions package. The chapter was divided into four sections: sovereignty, change and amendment in taxes and exemptions. The first section on sovereignty covered the period from the eve of the Israeli occupation of the West Bank and the Gaza Strip on June 7, 1967 to Dec., 1994. The researcher studied the legal basis of the illegality of the imposition of taxes during the occupation as stipulated in Article 43 and Article 48 of the Fourth Hague Conventions signed in 1907, and Israel's introduction of changes on tax categories personal and family exemptions according to researchers in the field. The researcher also traced the military orders, issued by the so-called Civil Administration of Judea and Samaria and the Israel Defense Forces Command، according to which changes and amendments had been introduced into the Jordanian Income Tax Law # 25 of 1964. These changes and amendments have been classified in the appendices (1, 2, 3) at the end of the study. The second section covered the period from 1995 to the end of 1998. The researcher examined the amendments and facilities introduced by the Palestinian National Authority (PNA) to the taxpayers in the frame of tax and procedures which it had begun with the aim of reforming the Palestinian tax system. Section three was devoted to the reforms and amendments introduced by the PNA in the tax categories and personal and social exemptions in its attempt to make the tax system suitable to the prevailing economic and social conditions of the Palestinian society. The last section tackled the Jordanian Income Tax Law since the issuance of the first Jordanian Income Tax Law in 1933 up to 2006. The purpose of this investigation was for two reasons. First, the Jordanian Income Tax Law is the legal reference to the Palestinian Income Tax Law, for the Jordanian Income Tax Law # 25 of 1964 was applied in the West Bank from 1967 to 2004. Second, it was studied in order to highlight the importance of introducing appropriate amendments and changes in the texts of the law from time to time to make it suitable for the various goals which the government endeavors to achieve and the economic and social circumstances of the society in which it is applied. Chapter four investigated the extent of the achievement of social justice in the Palestinian Income Tax Law # 17 of 2004. Like chapter three, this chapter had four sections. In the first section, the researcher studied the economic and social conditions in the context of which the law had been issued. The second section dwelt on the tax categories and personal and family tax exemptions included in the provisions of the law. The third section suggested several virtual applicable cases in the Jordanian Income Tax Law # 25 of 1964 and its Palestinian counterpart # 17 of 2004 to show the differences in their provisions pertinent to tax categories and personal and family tax exemptions, and to show how much appropriate the provisions are in the Palestinian Income Tax Law #17 of 2004 in the light of the prevailing economic and social environment and accordingly the extent of the achievement of social justice by these provisions. These have been classified in the form of conclusions and recommendations at the end of the study. Section four held a comparison between the Palestinian and Jordanian income tax laws pertinent to personal and family tax exemptions and extent of their achievement of social justice, for there is no absolute justice in the provisions of any tax law and only relative justice prevails in all tax laws.