How the hidden tax hits people – Part 1

How does hidden taxation hit the people?

According to Iran Gate, the increase in local tax rates in the past two years has once again raised the question of whether Iranians pay less taxes compared to other countries. Media outlets supporting the government claim that Iranians pay significantly less taxes than other nations. However, this claim is incorrect, and in fact, Iranian citizens pay one of the highest tax rates to the government through hidden taxation.

Last month, the controversial debate between Mosi Ghanehnejad and Ali Alizadeh once again brought up topics such as local taxation. The question of whether Iranians pay less taxes to the Islamic Republic government or if this claim is false was raised in society. Perhaps the most concise and informative response to this statement can be summarized by Mosi Ghanehnejad’s question: ‘Then what happens to the oil money?’

It can be said that there are six types of hidden taxes in Iran that are collected by the government. However, these taxes have changed in different periods, but the evidence indicates that the volume of hidden taxes is at its highest level compared to previous governments. These six types include inflation tax, oil tax, communication tax, market tax, population tax, and savings tax. The following provides an explanation for each of these cases.

Inflation tax

Economists believe that inflation is essentially the government’s silent theft from ordinary people, especially the middle class. In other words, governments empty the pockets of citizens by printing money, which leads to a devaluation of the national currency. However, because the wealthy become wealthier with intensified inflation, they welcome this government policy.

Lower-income strata of society are not very sensitive to this phenomenon because they always have extremely low purchasing power. In fact, it can be said that the government puts its hand in the pockets of the middle class and steals their assets by intensifying inflation in order to compensate for budget imbalances.

One example of contradicting these types of economies is the Norwegian government, which generally does not allow the withdrawal of oil revenues and is obligated to invest all the sold oil in a fund called the National Investment Fund for the benefit of future investors.

But in Iran, this is not possible. The government sells the oil and is not accountable to anyone. Dr. Ghaninejad’s golden sentence also refers to this exact point: So what happens to the oil? In other words, the government is irresponsibly selling oil and gas, burdening the future and current generations of the country with taxes.

Because these resources do not belong to the government, they belong to each and every Iranian citizen. However, here the government, in a not-so-hidden and complicated way, puts its hand in the pockets of future generations and Iranian citizens and imposes heavy taxes. In the next part of this file, four other types of hidden taxes are explained.

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