In recent years, the growing inflation in the country has led to the spread of poverty in Iran, so that the head of the Higher Institute for Social Security Research has stated that at least 30 percent of the population is below the poverty line in Iran. Of course, some estimates put the number of people below the poverty line in Iran more than this figure.
The spread of poverty in Iran has resulted that a large segment of the middle class falls below the poverty line, especially in the past three years.
Although in recent years, different statistics of the number of Iranians below the poverty line have been presented, and the regime’s government is trying to hide that real numbers, but all statistics agree on the principle that in the past four years, the number of Iranians below the absolute poverty line has increased year after year and more middle-class households have joined the lower strata.
For example, the Donya-e-Eghtesad newspaper recently citing the results of a credible international study, said that since the beginning of the 2000s, the number of Iran’s poor has doubled, with four million more falling below the international poverty line, earning $5.50 a day. Also, about 8 million people have gone from the ‘middle class’ to the ‘downward middle class’.
Or this June, Roozbeh Kordoni, head of the Supreme Research Institute of Social Security, announced that while the population below Iran’s absolute poverty line had reached 15 percent from 2013 to 2017, the number of people below the country’s absolute poverty line increased to 30 percent and by the end of 2019, practically 25 percent of Iran’s population was below the absolute poverty line.
So far, no comprehensive and consistent reports on the absolute poverty line have been presented about different cities and provinces of the country, which is considered for the regime as a secret and security issue.
Despite the lack of accurate statistics on the number of people below the absolute poverty line in Iran, the number of these people has definitely increased in the past three years, since the cumulative inflation in the three years of 2018, 2019, and 2020 was 115 percent, and of course, the average inflation rate in the 2000s was 24 percent.
In Iran’s economy, the middle and low-income segments of society are much more affected by inflation than the wealthy. Due to the disruption of wealth redistribution systems i.e., banking system, tax system, and subsidy system, the damage caused by inflation is directly imposed on the middle- and low-income classes, because this disruption in the country’s wealth redistribution systems is created deliberately by the regime’s officials in the favor of its elements.
With cumulative inflation of 115% in the past three years and due to the disruption of Iran’s economic system, certainly since 2018, the number of households below the absolute poverty line has been growing significantly compared to before, as a large part of the middle classes have joined the low-income segments of society during this period.
In the constitution of this regime, governments are also obliged to provide minimum livelihoods, including housing and jobs suitable for the people of the society, something that has not happened over the past decades, and the people’s protests for a basic life has been responded to always with repression, detention, and torture.
Unless the economic structures in Iran have been reformed, there is no hope for the eradication of poverty in Iran, because the three key systems of Iran’s economy, the banking system, the tax system, and the subsidy system, are all in the service of the wealthy ruling people.
Hidden subsidies, including fuel subsidies, energy carriers, and other subsidies in the manufacturing sector, all benefit the wealthy with manufacturing enterprises. Also, a large portion of importers of goods to Iran also have preferential currency rents or rents monopolizing in different markets, and this shows that Iran’s subsidy system is entirely regulated for the benefit of the wealthy.
The country’s banking system also fully serves the rich, because when the interest rate of banking system facilities is about 18 percent and inflation is about 40 percent, so it can be said that the real interest rate in Iran is -22 percent. This means that anyone who can get facilities in Iran makes 22 percent profit per year. However, in Iran, mainly the wealthy, i.e., those who have access to large collateral and have extensive rents, can receive large collateral.
In Iran, taxes such as wealth taxes, capital gains taxes, and taxes on luxury goods are not defined. Meanwhile, a large part of Iran country’s wealthy people is basically not paying any taxes, so that this group both deals with tax evasion and receives tax exemptions using written and unwritten laws and corrupt relations.
When the three key systems of Iran’s economy, tax, banking, and subsidy systems, serve the wealthy, so in such circumstances, the eradication of poverty is more like a joke, and until these wealth redistribution systems are reformed, there is no hope of reducing poverty in Iran.
In Iran’s inflationary economy, because wealth redistribution systems do not work properly, inflation is imposed on the middle and poor deciles of the society. This has led to a day-to-day decrease in Iran’s middle class in the past few years, and if this trend continues, we will soon see the elimination of the middle class, which means that Iran’s economy will become a bipolar economy in which 10 percent of the population will be wealthy and 90 percent of the country’s population will be poor.