A sudden spike in taxes in Iran’s upcoming budget has taken both the public and analysts by surprise, indicating a worsening of the current economic crisis.
Reports from Tehran’s Entekhab news website revealed that the budget proposal includes a 10 percent tax on monthly incomes of 100 to 140 million rials ($200 to $280).
Jahan-e-Sanat daily also cautioned that the Iranian government is relying on an “inflation tax” to fund next year’s budget. The budget draft bill has already been submitted to the parliament, with the Iranian fiscal year beginning on March 21, 2024.
To address its substantial budget deficit, the government is anticipating a 50 percent increase in various taxes compared to the current year. Jahan-e-Sanat mentioned that total expected tax revenues will surpass 11,220 billion rials ($22.44 billion).
The total government budget for next year will reach 24,620 billion rials ($49.2 billion), marking an 18.2 percent increase from the current year.
This means that tax revenues will make up over 45 percent of the Iranian government’s operational budget, despite the budget increase being only half of that of the current year. Some media outlets questioned the reasoning behind a budget growth that is less than half of the current inflation rate, speculating that it denotes an austerity measure.
Additionally, the tax increases were described as “peculiar” by Khabaronline news website, especially in light of the Iranian government’s claim of increased oil exports, despite ongoing US banking sanctions. The government has sought to apply “luxury” taxes, targeting those with vast estates and high-value assets.
Another significant point in the upcoming budget bill is the utilization of euros instead of US dollars for the government’s currency resources and expenses. Reformist Arman Daily suggested that this shift may serve as a symbolic ideological gesture against the United States.
Tehran officials have repeatedly emphasized the need to eliminate the US dollar from the country’s limited economic transactions with the international community.
Concerns regarding the upcoming budget bill were raised by reformist news website Aftabnews, stating that the budget’s growth of only 18 percent compared to the current year falls far short of the estimated inflation rate of at least 40 percent.
Discussing the worrying aspects of the next year’s budget bill, reformist daily Ham-Mihan noted that the bill sends a clear message: US sanctions will persist and possibly intensify, with no anticipated economic improvements next year.