Iran’s Oil Revenues Are Falling, and the Regime is Trying to Find New Sources of Income

But will rich Iranians pay up?

 

By the Free Iranian Staff

 

The Islamic regime’s oil revenues are declining, as US sanctions are achieving their full impact. While the US hasn’t yet quite achieved its goal of zero Iranian oil exports, the sanctions have reduced exports to a minute fraction of what they were a year and a half ago. As a result, the International Monetary Fund (IMF) has just estimated that the price of oil would have to attain $195 a barrel in order for the Tehran regime to be able to balance its budget. Oil currently sells at $62 per barrel and is not expected to see any major price spikes.

Thus, in their aim to design a budget that isn’t reliant on oil, the regime is now hoping to partially offset the resulting budget deficits by collecting taxes from individuals and corporations that, so far, have not been paying the taxes they are required to. According to Omid Ali Parsa, the head of the regime’s Tax Collection Agency, “a review of all financial transitions in the country indicates that 300,000 Iranians have incomes of more than $9,000 a year, but of those individuals, half of them are not paying their taxes, and the other half are paying less than what they are legally required to. This year, $51.8 million in income taxes were collected, but that is $136 million less than what it should have been had everyone paid what they are supposed to.” Tax evasion is so rampant in Iran because the general atmosphere of corruption that pervades throughout the regime allows officials and low-level inspectors to be easily bribed to look the other way, while, of course, the highest-ranking mullahs and IRGC generals, billionaires all, have no wish to contribute any of their personal funds to the nation.

The latest proposal from the Ministry of Economics is to have the regime directly deduct interest income from bank accounts, but, according to the Deputy Minister of Economics, Mohammad Ali Dehghan Dehnavi, “We haven’t discussed changing income tax brackets yet. We initially hoped to have the new amendments to the tax law finished by the middle of October, but because the subject is so intricate and complex, they probably won’t be ready until late December.”

He added, “When discussing what should be taxed, one should consider the entirety of an individual’s income, whether that income is derived from bank account interest, real estate, stocks and bonds, employment salary, anything that results in income and profit should be counted and taxed.” 

Meanwhile, in Hormozgan province, along the shores of the Persian Gulf, a provincial government office set up to combat currency smuggling announced that four men had just been arrested for smuggling $1 billion worth of Iranian rials to the United Arab Emirates. Currency trafficking is one of the biggest drivers of Iran’s sky-high inflation rate, and it reduces the gross national income of the country. Yet, many wealthy Iranians, who often earn their wealth via illegal and/or exploitative dealings, prefer to bank and/or convert their assets in foreign countries, rather than risk their wealth being taxed and/or confiscated. Due to this, it is often impossible to know the true net worth of most affluent Iranians.

The first names on a list of Iranians with large foreign bank accounts would, of course, be those of the regime leadership. In 2010, a document of unknown provenance was disclosed by Iranian opposition activists detailing the amount of cash various regime leaders were storing in foreign banks. While this document’s accuracy was never confirmed or denied, and no more up-to-date sources are available, it is at least a safe assumption that none of the regime’s high-level authorities will be paying any new taxes they impose on other Iranians.