Baku, Azerbaijan, Dec. 11
By Dalga Khatinoglu
For first time Iran's government decreased the reliance of the its budget on oil revenues to 31.5 percent, the lowest figure during last decades. The Iranian government submitted a $293-billion budget bill, which of government budget is set at $93.7 billion.
Falling global oil prices, from $110 in mid-2014 to current $65, forced Iran's government to decrease the oil price figure in next years budget bill from current $100/barrel to $72/barrel, but taxes revenues were set to increase by 30 percent to $23.15 billion.
The current share of taxes in Iran's GDP (at current prices) is about 7 percent, but Iran wants to increase the figure as much as possible.
Iran's economy has contracted by 8.7 percent during last two years, but the government announced earlier that the GDP growth last spring was 4.6 percent. The International Monetary Fund expected Iran's GDP growth to reach 1.5 percent and 2.2 percent in 2014 and 2015.
A senior expert at Iran's Center for Strategic Research within Expediency Discernment Council of the System Jamshid Pajouyan told Trend Dec.10 that regarding the low GDP growth, an increase in the tax revenues would put unbearable pressure on producers and above all on people.
Pajouyan, who was the head of Iran's state Competition Committee under the Ministry of Economy and Finance until November 2013, says that share of value-added tax growth in total taxes growth expected to be earn by government is very high, but practical terms the nature of value-added tax in Iran is very close to taxes on production, thereby increasing taxes means transferring the weight of taxes from producers' shoulders to people's.
('Value-Added Tax - VAT' is a type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale.)
Mahmood Khaghani, the former director general of the National Iranian Oil Co. (NIOC), the entity that is responsible for exporting the country's oil, told Trend Dec.11, "for realizing the taxes revenues, the Iranian government should boost the fight against corruption".
According to the official statistics, one third of Iran's total imports are carried out illegally. The head of Iran's Custom Administration Habibollah Haqiqi said on Oct.27 that some $20 billion worth of smuggled goods are imports into country annually. Iranian President Hassan Rouhani criticized growing corruption in the Islamic Republic in unusually blunt terms on Dec.8.
Iran stood at 136th place among 175 countries in terms of the Corruption Perceptions in 2014, Transparency International said in its annual report released Dec. 3.
Khaghani said that in order to achieve more tax revenues, the taxpayers should have good incomes to give more tax, while Iranian economy suffers from stagnation.
"The increase in tax revenues depends on GDP growth and itself depends on reaching a final nuclear agreement with P5+1 by mid-2015 and the imposed sanctions on Iran be eliminated," he said.
Iran and the P5+1 group (the US, UK, France, Russia, China plus Germany) agreed to extend nuclear talks until July 1, 2015 after failing to meet the 24 Nov. deadline to reach a comprehensive nuclear agreement.
The West imposed tough sanctions on the Central Bank of Iran as well as its oil exports/revenues in mid-2012. Iran has about $100 billion blocked assets aboard and isn't allowed to transfer inside due to the U.S sanctions as well.
Dalga Khatinoglu is an expert on Iran's energy sector, head of Trend Agency's Iran news service
Follow him on @dalgakhatinoglu
Edited by CN