The Chamber of Commerce and Industry filed a lawsuit against President Saleh and other executive members including the Prime Minister, Minister of Finance, Head of Tax Authority and Minister of Legal Affairs as well as the legislative authority represented in Parliament's Speaker.

According to the lawsuit, the sales tax law No. (19) issued in 2001 is unconstitutional and violates the effective laws.

The Supreme Court held the third hearing session about the sales tax law and its modifications. The court demanded the petitioners "to abide by the petitions’ form, and away with the English translations for the constitutional texts, and to mention only the contested texts".

"Once the government is involved in any case, the Ministry of Legal Affairs is responsible for their representation before the court," said Abdullah Mohamed Al-Anesi, a lawyer representing the Ministry of Legal Affairs.  

"We are five lawyers representing the government, and once the attorney of the Chamber of Commerce finishes his case, the appeal regarding those claimed unconstitutional laws will take place from our side," he stated as he was coming out of court.

He went on to say "Those laws that are claimed to be unconstitutional, are operative and had been issued from a legislative authority, they can't be stopped or inactivated unless the Yemeni Parliament decides to do so".

The capital’s Chamber of Commerce and Industry filed for the case over the unconstitutionality of many articles of the sales tax law. The case was postponed for considering whether the chamber’s lawyer abided by the previous court’s decision that was presided over by Supreme Court’s head and head of the Supreme Judicial Council, Esam Al-Samawi.

The Trade and Commerce Chambers union has demanded the cancellation or amendment of the sales tax law in order to decrease the burden it would put on businesses. 

"When this lawsuit was first presented, the parliament changed many of its articles because they were obviously opposing the Yemeni constitution," mentioned Sana'a University Professor and Commerce Chamber lawyer Hasan Ali Mugali.

Mugali pointed out that "There were many constitutional infringements in this law; e.g. anyone can go to judicial authorities to protect his rights and interests, that's what the constitution clearly states and guarantees in articles (41, 49 and 51), but article (20) of sales Tax law explicitly indicates that they cannot do so.  This is a big contradiction. However, the constitution is absolutely favored and followed."

"The lawsuit started in April 2005 when Commerce Chamber members felt that there was no other option to stop implementing unfair articles and to seek protection through law", Mugali added.    

He added "We are looking to change more unconstitutional articles in order to have better and strong laws, protect the Yemeni economy and businessmen, and protect the citizens themselves against any violations against their own constitutional rights.

The suit is composed of 152 pages along with another 200-page file explaining that some of the unconstitutional articles were adopted before by some Arab countries such as Egypt and European countries such as France.

Traders believe that the previous tax system was more efficient, and better suited Yemen as it was related to household income.

Businessmen warned that the multi-taxation system would not provide an appropriate environment for investment and might push local investors to quit the country. 

Mr. Jamal Al-Mutarib, a senior member in Commerce and Trade Chamber and businessman revealed that it's important to understand that though about 5 articles and more in the law had been changed and modified since the beginning of this lawsuit, there are still many which are still of concern because they simply violate the traders rights and lead to an economic crisis in the country. He’s afraid that people aren't aware of how serious this case is.

"Taxation is carried out to achieve social justice, but it does not achieve this purpose here. This law will encourage tax evasion, which is already estimated at 56 percent due to smuggling of commodities which the tax authority is not able to control," he added.

He continued, "The law which is recommended by the World Bank and the International Monetary Fund, will put a heavy burden on the shoulders of the ordinary people. The reforms of the World Bank have not improved the economic situation, rather they just want to leave a lot of taxes which people will be unable to pay. The sales tax will reduce the purchasing power of the people."

Over 42 percent of the Yemeni population live  below the poverty line under US $2 per day and illiteracy is estimated at 50 percent. The average annual individual income is $450 and unemployment was running at 37 percent in 2003, according to World Bank statistics.