Jordan's new PM announces withdrawal of controversial tax billl

Jordan's Prime Minister-designateOmar Razzaz said on Thursday he would withdraw a controversialtax bill soon after he has been sworn in by King Abdullah.

Razzaz told reporters after a meeting in parliament there was a consensus to withdraw the tax bill, which had sparked rare protests against IMF-driven economic policies that critics say have eroded living standards.

The announcement came after hundreds of people pressed ahead with protests in Jordan's capital Amman on Wednesday.

Some unions went on strike despite King Abullah having replacing his prime minister with Razzaz to defuse public anger.

The government plans to raise taxes had sparked the largest protests in years in Jordan, a US ally that has mostly escaped years of regional turmoil.

Rallies in Amman, the capital, and other cities have brought thousands onto the streets, snowballing since unions first called a strike a week ago.

Many unions pulled out of Wednesday's walkout, a day after the king appointed Al-Razzaz, a former World Bank economist, to form a new government and urged talks over tax hikes.

Public resentment has grown since the government ended bread subsidies and hiked the general sales tax this year under a plan driven by the International Monetary Fund (IMF) to cut Jordan's $37 billion debt.

Jordan will ask the IMF for more time to implement reforms after the protests showed that pushing the country beyond its means risked instability, officials said.

"I pledge to hold dialogue with the various sides and work with them to reach fair a tax system," the Harvard-educated Razzaz, tweet earlier. He was education minister in the outgoing cabinet.

Consultations

He will now begin consultations to form a new government after Hani Mulki resigned as prime minister.

Still, on Wednesday, more than 1,000 protesters demonstrated well beyond midnight, waving flags and shouting, "Bread, freedom, social justice."

Several people fainted, and police said that a man who stabbed an officer had been taken into custody.

Security forces appeared to detain some demonstrators and blocked roads to stop the protesters from reaching the nearby Cabinet office.

"We still have many more demands that have not been fulfilled," Saleh Shouha, 22, told Reuters as others chanted against the government's economic policies and sang, "The people want to bring down the parliament."

"We will stay in the street until all our demands our met. We want justice, dignity and bread," the university student said.

Shops shut for a bit

Shops and pharmacies shut down for a few hours on Wednesday, hanging signs that said, "I'm taking part in the strike" but life in the capital mostly went on as usual.

Unions of doctors, engineers, and lawyers mainly took part in the walkout, which drew smaller crowds than previous demonstrations. Hundreds of people holding flags and picket signs converged outside the headquarters of the Professional Unions Association, demanding an end to the planned income tax law.

"We will give the government a chance once it is formed, after that we will decide our next steps," union leader Ali al-Abous told Reuters.

Widely seen as a unifying force, the king has said the new cabinet must review the entire tax system and hold dialogue over the bill with political parties, unions and civil society.

The government has said it needs funds for public services and it has argued that reforms would reduce social disparities.

Jordanians burdened

In his letter designating Razzaz, King Abullah said price hikes had burdened Jordanians. He called for better services and blamed regional instability for the sluggish economy.

His comments indicated the new government could shelve the draft tax law, which it sent to parliament last month, and slow the pace of price rises.

Lawmakers were on course to ask the king's permission for an early exceptional session, with a majority demanding the withdrawal of the tax law, the speaker has said.

Officials noted that Razzazz had been an opponent of reforms that hurt the poor, and said his appointment conveyed to foreign donors that Jordanwould press ahead with reforms, though in a gradual way.