Confusion in Iran’s economy plans

Iran Materials 29 October 2012 13:14 (UTC +04:00)
Iranian Parliament is preparing a bill aimed to decrease taxes and social welfare charges of the producers by 10 percent and 15 percent respectively
Confusion in Iran’s economy plans

Dalga Khatinoglu, Trend Agency's Iran News Service Chief/

Iranian Parliament is preparing a bill aimed to decrease taxes and social welfare charges of the producers by 10 percent and 15 percent respectively.

Currently, the share of taxes in Iran's GDP is about 7 percent.

On August 10, the State Tax Affairs Organization's director Ali Askari said that the current year's budget law has envisaged earning some $27.7 billion as a tax income.

Decreasing taxes may help industry sector to revive a little, but regarding western sanctions targeting Iran's oil revenues, Iran has no choice, but to increase tax incomes by 2.5 times. Last year, Iran's GDP was about $411.4 billion, while oil revenues from exporting crude oil and petroleum production were about $115 billion.

However, Iran's oil export has fallen to 1.2 million barrels per day on average during current year. Even, according to the latest report of the International Energy Agency, which was published on October 12, Iran's crude oil exports and output stood at respectively 860,000 barrels and 2.63 million barrels per day in September, compared to 2.4 million barrels of oil exports and 3.68 million barrels per day last year. These figures were confirmed by Iranian Parliament Vice Speaker Mohammad Reza Bahonar last month.

Oil and oil production revenues make up about a half of Iranian yearly budget, which is about $449 billion based on official USD rate in Iran, and Iran has to increase taxes revenues to compensate oil export drop.

Last week the Strategic Research Center of Iran Expediency Council published a report, written by Iran's former deputy Oil minister during Mahmoud Ahmadinejad's first presidency, Akbar Torkan.

The report showed that about 60 percent of economic sectors in Iran do not pay any taxes, while 21 percent of economic activities are unaccounted.

Iran's current state budget has increased by 930 trillion rials (about $80 billion) compared to last year's.

Then Iranian government's expenses rise year to year, while Ahmadinejad Administration has faced significant amount of deficit during the last several years.

The Iranian Central Bank issued a report in May 2012, saying government debts to internal banks until the last solar year have increased four times during six years and reached 400 trillion rials (equals to $31.7 billion based on the official USD rate) and the head of the Supreme Audit Court, Abdolreza Rahmani Fazli confirmed in June 2011 that the Iranian government has borrowed $15 billion from banks since December 2010.

Regarding these facts, decreasing taxes and social welfare charges would damage more Iranian government and the economy.