EghtesadOnline: T he government’s tax revenues once again exceeded its those from the exports of oil and petroleum products in the four months of the current fiscal year (March 21-July 22), in line with President Hassan Rouhani’s economic strategy to boost tax revenues.
The latest report by the Central Bank of Iran indicates that revenues associated with petroleum sales stood at 261 trillion rials ($6.6 billion) for the four-month period, posting a 147% increase and meeting 67% of what the government had expected to earn as per the budget estimate.
This comes as the government’s overall revenues, including tax proceeds, amounted to 374.8 trillion rials ($9.6 billion), registering a 5.7% decline YOY. Although tax revenues were projected to hover around 395.6 trillion rials ($10.14 billion), they only reached 296.9 trillion rials ($7.61 billion).
The government’s tax revenues consist of its returns from direct and indirect taxation. Direct taxes include three groups of “tax on legal entities”, “income tax” and “wealth tax”, according to Financial Tribune.
Overall, direct tax revenues stood at 159.8 trillion rials ($4.1 billion) during the four months, registering a decline of 3.8% over last year's similar period.
Indirect taxes, including “tax on imports” and “tax on goods and services”, reached 137.1 trillion rials ($3.51 billion), indicating a 4.8% rise year-on-year.
Tax on imports generated 25.2 trillion rials ($6.46 billion), 18.4% more than last year's corresponding period and tax on goods and services earned the government 111.9 trillion rials ($2.86 billion), up 2.2% YOY. Value added tax, which is a subcategory of tax on goods and services, increased by 15% to reach 79.7 trillion rials ($2.04 billion).
The budget bill for the fiscal 2017-18 has projected larger revenues from taxes than from oil exports—1,164.6 trillion rials ($29.86 billion) of tax compared with 1,139 trillion rials ($29.2 billion) of oil and petroleum products.
The government managed to keep the proportion fixed for the first two months of the year. However, CBI’s figures for the third month of the year showed sources of government revenues changed in inverse proportion in Q1 to register a surprising decline in tax revenues.
The government earned 181.9 trillion rials ($4.66 billion) from taxation in Q1, whereas revenues from the sales of oil and petroleum products reached 188.9 trillion rials ($4.84 billion).
> Budget Deficit Widens
The budget deficit widened much more than expected in the first four months of the year, the report said, reaching 161.9 trillion rials ($4.15 billion), up 26.8% compared with the similar period of last year. The shortfall for the period was higher than forecast: 109.2 trillion rials ($2.8 billion).
To cover the widening deficit, the government has been issuing bonds. The four-month data show 173.9 trillion rials ($4.45 billion) worth of bonds were issued during the period, showing a 28.5% rise compared with the similar period of the year before.
Spending stood at 741.3 trillion rials ($19 billion) during the period under review, indicating a rise of 22.6% year-on-year. The figure is around 86% of the expenditure predicted by the government in the budget.
Despite a 23.5% rise over last year’s similar period, development spending was much lower than the projected 242.5 trillion rials ($6.21 billion). The government only spent 12.8 trillion rials ($328.2 million) in the first four months of the year on development projects.