Some economists in Tehran believe that the government should rely more on taxes rather than oil sales as a source of revenue, amid falling oil prices in international markets.
President Hassan Rouhani submitted next year’s budget bill to the parliament on Dec. 7, based on oil prices remaining around $70 per barrel.
Critics are now warning that the prices could plunge even further as crude is currently traded well below $60.
Among the critics are two prominent economists who warn that the government is likely to face deficit next year, given the falling oil prices among other economic woes.
Saeed Laylaz and Abbas Hoshi said in an interview with IRNA on Tuesday that the Rouhani administration must create a taxation system that could soon replace oil exports as the main source of revenue.
The administration should curb tax evasion and eliminate tax exemptions even in the agricultural sector, Laylaz said during the interview.
“Over the past 40 years, an efficient taxation system has been ignored by the governments thanks to high oil revenues,” Hoshi said. “This has created serious challenges for recent governments as they can’t count on the oil market any longer.”
Hoshi said the country lacks a comprehensive tax law that could clarify tax bases.
Tax base refers to the assessed value of a set of assets, investments or income streams that is subject to taxation, or the assessed value of a single asset that is subject to taxation. Anything that can be taxed has a tax base.
Hoshi suggested that officials need to revise tax rules and establish a database to keep a record of every citizen’s annual income.
To generate more revenue, Laylaz also suggested that the government should set the rate of the dollar at 3,000 rials, instead of 28,500 rials, as proposed in next year’s budget.
He said the prices of energy carriers must also increase by 50 percent.
“Top earners in the Iranian society take advantage of cheap fuel provided by the government,” he said, criticizing the government for “failing to fairly distribute the money saved from subsidy reforms.”
