The Iranian government’s budget is now being fed more by taxes than oil revenues for the first time in half a century.
The Rohani Administration is boasting this is due to its emphasis on tax collection, something often ignored in the past. However, the main reason for the shift is sanctions that have cut Iranian exports—and oil revenues—by more than half.
According to Ali Kardor, the deputy managing director of the National Iranian Oil Company (NIOC), “For the first time in 50 years, the government’s share of the oil revenue is less than what it is earning from taxes,” he told The Guardian of Britain.
“Only around 10 percent of Iran’s GDP is currently dependent on oil,” he said. Almost 20% of oil income goes into a sovereign wealth fund, which is reserved for development purposes.
Hossain Rasam, the director of Rastah Idealogistics, said, “Under advice from the IMF, Iran began to redefine taxation in the early 1990s, but genuine efforts only started under reformist President Mohammad Khatami and continued under Mahmud Ahmadi-nejad, when VAT [Value Added Tax] was first introduced.”
He said, “Bearing fruit just now, Iran is pursuing tax collection more seriously and putting itself in order to rely more on taxation….
“This is a positive development for Iran, for the more tax people pay, the more accountability and responsibility they will demand from the government.”
Under Reza Shah Pahlavi, who abdicated after the Anglo-Soviet invasion in 1941, Iran constructed the nationwide railway thanks to a version of VAT on sugar and tea.
