It looks like a referendum to remove subsidies will be held in parliament soon. To curb inflation, the 13th government has decided to make conditions more difficult for low-income households. It is very clear that the hidden subsidy policy does not go to the pockets of the poor in the country. Eliminating subsidies will certainly not benefit low-income households. The previous government made promises about subsidies due to high gasoline prices. But there was no change in the level of social welfare. It seems that the thirteenth government, with the help of the parliament, followed the path of the previous government. In the following, we will evaluate this issue. Please be with Artan Press.
*** Seven axes of economic reform in the main government
In its first economic plans, the thirteenth government decided to improve the situation in seven areas. The government has focused on the export sector. If these cases are implemented one by one in the field of implementation and the thirteenth government proceeds in accordance with this plan, we can expect a serious change in the Iranian economy. The subsidy elimination referendum seems a bit hasty, as it targets the living conditions of the underprivileged.
*** VAT and subsidy removal referendum
The main government has decided to take good security measures in the tax sector. Of course, taxation has its own rules and conditions. But its mechanism is much more important than its financial implications. If the subsidy elimination referendum is approved, it will not have a tax advantage for the lower class. This equation is doomed to failure and create more severe class differences in society. The 13th government should formulate good clauses in its announced plan for tax affairs and support of production in this area, based on which we hope that mechanized funds and the establishment of tax justice will be implemented in this government. In such a way that the issue of tax revenue being collected only from the three classes of salaried employees, producers and importers with certificates should be stopped. Taxation should be extended to other tax classes. It remains to be seen to what extent the elimination of subsidies and tax matters can help each other.
*** Objectives of holding a referendum to eliminate subsidies
It remains to be seen what the purpose of the subsidy elimination referendum was. In a situation where we do not have any corrected inflation in basic goods, we should not attack only the income of some Iranian households. This is a clear issue. Why should the parliament launch this plan at the beginning of the new government? Refer to the prices of basic goods. Now the price of raw milk must be determined on the basis of supply and demand, however, there is no need for a shock to the market. Announcing the price of 6,400 tomans per kilogram of raw milk will eliminate dairy products from the household table. Therefore, the government should distribute subsidies to prevent per capita consumption. In the current situation, we need targeted subsidies in society. The same price of milk in society alone can completely eliminate the issue of the computer removal referendum. It remains to be seen for what purpose the main government is pursuing this act.
*** Collection of consumption tax from low-income households
VAT is one of the most common methods in government economic systems. This method is a very good method. No exceptions should be made in this regard. If there is an exception, the system will be corrupted. This style of tax can be provided as a subsidy to low-income households. A subsidy elimination referendum could lead to an irrational path to taxation. Our problem today is that the consumption tax has not been spent among the low consumption. We see that VAT is imposed on the buyer solely as a cost imposition. While this tax should be provided to low consumption and the environment.
*** Collection of VAT from the production sector
It is better that the issue of mechanized funds and direct sales be emphasized by the government in tax collection. While in the field of value added tax, unfortunately, this tax is levied on production. This seems to be one of the bottlenecks that if the thirteenth government collects taxes from this sector from the final consumer, something important will happen in this area in favor of production on the one hand and an increase in government tax revenues on the other. In the field of livelihood and payment of subsidies, unfortunately, there is no mention of assigning a currency of 4,200 Tomans or a preferred dollar. Holding a referendum to eliminate subsidies is a challenging issue. The government should not use the excuse of budget deficit for this issue.
*** Irrational reasons to consider subsidy removal referendum
Some claim that the subsidy elimination referendum was justified. But we have suggestions for the government to be able to continue to support families under pressure. The government has been able to gain a lot of power in the foreign exchange market in recent years. On the other hand, in the capital market, a heavy budget deficit was removed from the government last year. The proposal is that the 4,200 Toman and Nimai currency be eliminated and only the Senate currency and the supply and demand mechanism be implemented; In this case, the difference between the basic goods of the government and the government will be far greater than the announced figures, and it can help the government even more. To remove overt and covert subsidies.
*** The big paradox especially of subsidies
There is a big paradox in the society regarding the payment of subsidies. While the people wait for the government’s decision to increase subsidies and support schemes, parliament wants to hold a referendum to remove overt and covert subsidies. Member of the Councils Commission
The recent parliament has announced that, given the high amount of cash subsidies paid, the referendum has called for a referendum to remove overt and covert subsidies. Due to the very high amount of cash subsidies paid per year, according to Article 59 and Article 36 of the law, I have called for a referendum to remove overt and covert subsidies and pay them directly to the people.
*** Parliament welcomes the scenario of eliminating subsidies
It seems that the referendum on the elimination of subsidies has been welcomed in the parliament. So far, 22 delegates have signed the petition. Requires 100 signatures to submit. Approval of this request also requires obtaining at least two-thirds of the votes of members of parliament. According to this decision of the parliament, if the hidden and overt subsidies are to be eliminated, the prices of the subsidized goods will increase like energy. But it is added to the cash subsidy that households receive. So a number of subsidies are removed and added to a number.
*** Detailed statistics of cash subsidy payments
About 60 million people receive gasoline subsidies and about 78 million receive cash subsidies each month, and it is likely that 18 million people will receive cash subsidies but no livelihood subsidies. The issue of eliminating cash subsidies has also been raised in the government for several years. Note 14 of the budget also states that the Ministry of Cooperatives, Labor and Social Welfare is responsible for identifying three-tenths of subsidy recipients. The three deciles were to be identified by the Ministry of Labor and removed from the list of recipients. According to the directors of the Program and Budget Organization, the population of these three deciles is estimated at 20 million.
*** Inflationary stagnation is the endless nightmare of Iran’s economy
In the current situation, our economy has re-entered the period of stagflation. Economic factors and variables either change so much that they are unpredictable or are so ambiguous that they cannot be the basis for decision making. When we look at Mr. Reisi’s promises and look at the current state of the country’s economy, the possible paths of the country’s economy in Mr. Reisi’s government can be scenarioized. The common denominator of all these scenarios is “inflation”. Inflation is not a good reason to launch a referendum to eliminate subsidies.
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