The Iranian Minister of Economic Affairs and Finance stated that the government’s tax revenues have reached 8,000 trillion rials, equivalent to $13.5 billion. According to Ehsan Khandouzi, the Tax Organization achieved 108% of the projected revenue for 2022, setting a new record in the country’s tax collection history.
Khandouzi did not mention the annual growth rate of tax revenues but said the government had 4,700 trillion rials in tax revenues last year, indicating significant growth.
Oil exports are considered the main source of budget revenue for Iran, which is still under sanctions by the United States.
Although Tehran sells approximately 1.3 million barrels per day to China, it is unclear how much cash it receives in return due to international sanctions.
Since 2023, the government has exerted significant pressure to raise taxes and increase their collection. Over the past three years, budget tax revenues have increased by more than 162%.
The government’s goal for the current fiscal year is to collect over 13,000 trillion rials in tax revenue, reflecting a 62% increase from the previous fiscal year. These figures indicate a 326% increase in tax revenues compared to 2021.
As a result, the share of tax revenues in the government’s budget has increased from 25% to 53% during this period. Iran’s government tax revenues have increased by 326% since Ebrahim Raisi became president in 2021.
The surge in tax revenues during Raisi’s presidency, from July 2021 to May 2024, coincided with an increase in poverty among Iranian citizens.
According to the United Nations Food and Agriculture Organization (FAO), per capita meat consumption decreased by one-third between 2020 and 2023.
Why is the government increasing taxes?
Before the US sanctions against Iran in 2018, about 40% of the government budget relied on oil revenues, but due to oil sanctions, this amount has decreased to 21% this year.
The Iranian government has projected total domestic sales and export revenues from oil and gas in the budget to be 6,414 trillion rials which is about half of the tax revenues or approximately $11 billion at the current exchange rate.
Officially, the government’s budget share is less than 50% of oil export revenues. Of the total oil dollars, 14.5% is allocated to the National Iranian Oil Company, 2.5% to deprived areas, and the rest to the National Development Fund.
In recent years, the government has also used the National Development Fund’s share of oil revenues to cover its budget deficit. Despite this, the government budget still faces a 30% deficit each year because oil revenues are much lower than the pre-sanctions period.
OPEC has not yet released its annual report for 2023, but Iranian customs statistics show that the country’s oil export revenue was $37 billion in the previous fiscal year.
The actual cash revenue from crude oil exports to China remains a secret. Many observers believe that the Iranian regime directly uses its oil revenues. Accordingly, part of the regime’s export revenues is kept in China to be used later for paying the costs of importing goods to Iran. Another reason for the increase in tax revenues is inflation.
According to estimates by the International Monetary Fund (IMF), Iran’s annual inflation rate has averaged over 42% since 2020.
Therefore, even considering the inflation rate, the Iranian government should have increased taxes by a maximum of 160%, not 326%.
