Raisi’s fiscal policy: benefiting the government, not the people

On May 27, the Iranian state-owned newspaper Hamdeli published a report assessing the activities of the late president of the regime, Ebrahim Raisi.

The report includes observations by Davoud Manzoor, head of the Program and Budget Organization, highlighting the significant increase in oil revenues and taxes under Raisi.

Despite these increases, the report raises a critical question: Why haven’t these gains translated into improved human well-being?

Hamdeli noted that under the 13th government led by Raisi, the country recorded an additional $30 billion in oil revenues in 2022 and 2023.

Additionally, there was a staggering 156% increase in tax revenues over the same period. However, these financial benefits were accompanied by high inflation rates of 45.8% and 41%, resulting in a cumulative inflation rate of 106%.

The report highlights a disturbing discrepancy: while government revenues have increased, the purchasing power of workers, retirees and workers has declined sharply.

In his defense, Manzoor blamed the previous government for the economic problems, a common tactic of the regime. Hamdeli was critical of this narrative, suggesting that the repayment of the previous government’s debts should not overshadow the responsibility of the current administration.

To illustrate the insignificance of this debt repayment in the broader economic context, Hamdeli cited Manzoor’s numbers: 320 trillion tomans (about $6.4 billion at an exchange rate of 50,000 tomans per dollar) of principal and interest on the previous government’s bonds.

This amount is almost equal to the revenue from oil sales to South Korea during the previous administration. Even excluding this freed currency, the $6.4 billion total represents less than half of the annual increase in oil revenues, calling into question Manzoor’s attempts to attribute the current crisis to the past government.

The newspaper further delved into the regime’s budget deficit. According to research centers, including the Parliament Research Center, this year’s budget deficit is expected to be higher than ever.

Hamidreza Ghasemi, a development planning researcher, pointed out that there is a systematic overestimation of revenues and underestimation of expenses. In particular, he mentioned the underestimation of 230 trillion tomans for bread and living subsidies.

This discrepancy contributes to large budget deficits that paradoxically deepen poverty rather than alleviate it, as the intended anti-poverty subsidies do not offset the inflation and inefficiency they generate.

Ghasemi criticized the 2024 budget for lacking specific targets to alleviate poverty. He argued that the budget lacks a long-term strategy and brings benefits primarily to the government’s supporters, rather than meeting development needs.

Without significant procedural changes, he saw no hope for reforms. He emphasized the importance of public awareness of their rights and indirect costs imposed on them by inflation and inefficiency.

In a related report, state news agency Mehr provided detailed statistics on the government’s rising tax revenues. In 2023, tax revenues totaled 806 trillion tomans, an increase of 71% compared to the previous year and 108% compared to the approved budget.

Direct taxes, including corporate, income and property taxes, accounted for 60% of total tax revenues and amounted to over 484 trillion tomans.

The remaining 40% were indirect taxes on goods and services, which represents a significant increase of 81% compared to the previous year and 106% compared to the approved budget.

Mehra’s report also details tax contributions from various sectors. Corporate taxes accounted for 6% of the total collection, amounting to approximately 51 trillion tomans, while taxes on private and public sector employees accounted for 10% of the total, or approximately 80 trillion tomans.

In summary, although the Iranian regime under Raisi has seen significant increases in oil and tax revenues, these financial gains have not translated into improved living standards for the population.

Instead, rising inflation and fiscal mismanagement led to declining purchasing power and deepening poverty.

Critics argue that without significant procedural and strategic reforms, these economic policies will continue to be ineffective in solving the fundamental problems facing the country.