The latest proposal by the Ministry of Economic Affairs and Finance on taxing bank transactions has provoked the ire of economic players and business owners.
A large swath of shop-owners in Tehran, Arak and other cities closed their doors to protest the new measure; they wanted government officials to understand that sanctions and inflation have increased pressure and that the new tax would be synonymous with the end of their businesses.
The statement was made by Morteza Afqah, an economist and university professor, in a write-up for the Persian-language daily Etemad.
A translation of the text follows:
Before coming to office, the new administration and President Ebrahim Raeisi personally used to claim that they would not tie people’s livelihoods with sanctions. But in actuality, the economy and people’s livelihoods were tied to sanctions; ill-judged economic policies have cemented this tie more than ever.
The economic instability is ruffling the feathers of producers, business owners and consumers. Under the circumstances, the government is girding its loins in preparation for another move to increase its revenues through taxation
In an economy, talks and promises are not consequential; rather it is decisions, strategies and approaches that are pivotal. Some officials presume that they will be able to reduce the pressure on people if they say “fair distribution of subsidies” instead of “deregulation”, or say “we won’t tie livelihoods of people to sanctions” instead of “increasing taxes”. It is strange that they have yet to understand that the country’s economy is dependent on oil exports; any move that leads to a decline in oil revenues would negatively impact people’s livelihoods.
The government is exerting maximum pressure on people to make up for the decline in oil revenues. The economy is not stable; the local currency is losing its value by the day. The economic instability is ruffling the feathers of producers, business owners and consumers.
Under the circumstances, the government is girding its loins in preparation for another move to increase its revenues through taxation. It is not clear who is giving such counsel to the government; an expert with the rudimentary knowledge of economics knows that under sanctions and inflationary conditions, the imposition of taxes will spell the end of production and business.
When imports account for a significant portion of raw materials, when oil revenues are not sufficient to purchase intermediate and capital goods, production will drop and when production declines, the overall revenues of supply chain will also decrease.
It is naive to think that you can replace oil revenues with tax income under such circumstances. Putting extra pressure on employees and business owners is anti-production and will lead to serious problems in the future.
More protests will be held by businesses unless policymakers decide to wake up and smell the coffee.
