London, 14 June - Faced with increasing economic pressure, mainly by U.S. sanctions, the Iranian authorities are having to come up with new sources of revenue to make up for its loss.
U.S. President Donald Trump announced last year that the United States would be pulling out of the Joint Comprehensive Plan of Action (JCPOA). The U.S. State Department then announced that it would be calling on all countries to cut their imports of Iranian oil to zero. Waivers were granted to some of the biggest importers of Iranian oil, but they expired, and were not renewed, earlier this year.
This was a major blow to the Iranian government because it lost its biggest source of revenue. Further sanctions followed, hitting the country’s metal sector – another huge source of income.
The United States made it very clear that the action was to cut the regime off from the revenue that it has been plundering on terrorist activities and malign proxy groups and militias across the region.
So, in a big to raise further funds, Iranian President Hassan Rouhani recently announced that a new chief had been appointed for the country’s Tax Organization. The president spoke about plans to “spread a tax culture” because it was no longer able to rely on its revenue from oil.
At the end of last week, the country’s Minister of Economy reinforced this view, stating that the country was going through a time of change and that it must move to depending on revenue rather than its oil.
The country’s tax system works in a way that the Iranian authorities benefit greatly. In free and democratic countries, tax revenues are used to benefit the people. This could be through improving or creating better public and social services and to create welfare opportunities for the people that need it. The situation in Iran is quite the opposite – the needs of the people are ignored and social and public services have been left to fall apart.
Instead of putting the people first, the corrupt officials in the government ensure that their pockets are well lined.
The Iranian president said that the government would be able to increase production if taxes were increased. However, he did not go into the practicalities of how this would work, especially given the precarious situation of the economy.
The economy is in such a dreadful state because of the decades of corruption and mismanagement. Corruption is so widespread that it is found at all levels of leadership. The system is so corrupt, that nobody really knows where the taxes that have been paid go to.
How much tax revenue has been spent on tackling the social issues in the country? How much has been spent on improving infrastructure? How much has been spent on production? How much has been allocated to reducing budget revenues? Nobody knows because the government will not take responsibility for it.
The situation is Iran is worsening and the authorities are unable to take any decisive action that will improve it.