The revenues and budget allocations for the main taxes and transfers have only had minor changes since 2010 as a share of GDP (Table 5), barring two important policy changes: the food (wheat and barley) and fuel subsidies existing in 2010 have been eliminated, and social safety nets have been expanded, partly when wheat subsidies were eliminated in January 2018 and replaced with a semi-targeted cash payment—the bread compensation scheme—, and partly with the expansion of NAF, which is expected to continue into 2021 (see reform discussion and assessment of impacts in the next section). Other minor changes were modest reforms to the electricity tariff system, a short-lived cash transfer to compensate households for the increased price of oil<sup>58</sup> and some amendments to sales taxes in 2017.<sup>59</sup> In December 2018 a new income tax law was signed; it proposed modest reductions in income tax exemptions and changes to the tax rates.

The new income tax law does not affect the comparison with the results here as its introduction was posterior to our analysis. A simulation analysis of the new law (World Bank, 2019) indicates that the impacts of the reform would large fall on the richest 10 percent of households. The broadening of the tax base concentrated in the richest households would bring a small reduction in inequality (0.8 points reduction in the Gini), but there would also be a small increase in poverty (1.1 points) reflecting households with large incomes but many dependents paying more tax (World Bank, 2019).<sup>60</sup> The introduction of the bread compensation transfer and the expansion in NAF, both of which we assess would be poverty and inequality reducing, can help explain the better performance of direct transfers in 2018 compared to 2010 (change in poverty and inequality from market to disposable income).

It is difficult to disentangle the reasons behind the persistence of the almost null change in inequality between disposable and consumable income and the increase in poverty in 2018 compared to 2010 as there are various policy and methodological changes in the interventions involved that would be consistent with such pattern, but the information in the 2010 study is not enough to assess marginal contributions separately for each fiscal intervention. Still, we can have a sense of the expected direction of change of some of the policy reforms that would affect consumable income. The most significant policy change was the removal of fuel and food subsidies, which were progressive in 2010 although very small (they represented each less than 1.5 percent of market income for the poorest decile). Still, their removal could certainly explain lower indirect subsidies received by the bottom of the distribution contributing to an increase in poverty; in the case of fuel subsidy, Atamanov _et al_ . (2017) estimate that the unmitigated removal would have stronger negative impacts in the consumption of the poorest quintile and would increase poverty and inequality. On the one hand, small changes to electricity subsidies and sales taxes could have added or subtracted from a potential increase in inequality, depending on the distribution of 58 Regional political unrest disrupted the supply of natural gas from the Arab Republic of Egypt to Jordan in 2011, leading to large increases in the cost of providing fuel subsidies and increasing the cost of producing electricity in Jordan. Various reforms, particularly the elimination of fuel subsidies and some increases in electricity tariffs, were introduced in an attempt to reduce Jordan’s dependence on energy imports and phase out subsidies to improve fiscal stability and reduce the country’s vulnerability to exogenous shocks. In 2014 a cash compensation scheme pegged to the price of oil was introduced to compensate households for the fuel price increases. As international oil prices fell, this cash compensation scheme was soon out of operation.

59 These include introduction of an SST levy to soft drinks and changes mobile phones and cigarettes SST, the movement of some items from the 0 percent and the reduced 4 percent rates to the general 16 percent rate, as well as from the 8 percent reduced rate to the general 16 percent rate.

60 Although these changes are under a scenario of full compliance with the tax law and are thus likely to be upperbound estimates.