Tehran, Iran – Iranian authorities are introducing an electronic coupon scheme to help citizens cope with the severe economic challenges caused by sanctions. At the same time, they are implementing widespread tax increases to address budget deficits.
As the busy shopping and travel season of Nowruz, the Persian New Year, approaches, the government of centrist President Masoud Pezeshkian has revived the coupon system, now available online, for at least a few more months.
The use of coupons in Iran dates back to World War II, when the country faced dire economic conditions and famine under British and Soviet occupation, which ended in 1946 after five years.
However, coupons are mostly remembered for their widespread use after the 1979 revolution. Neighboring Iraq, with support from global and regional powers, invaded Iran to counter the new theocratic regime, leading to an eight-year war that placed immense strain on the population.
The coupons
Starting this week, low-income and middle-class Iranians are being given up to 5 million rials (just over $5) per person to purchase limited quantities of essential food items like red meat, chicken, eggs, milk, cooking oil, rice, and sugar at government-subsidized prices. Approximately 60 million people are eligible for this credit.
Individuals can purchase only 11 items from a list of approved suppliers and shops nationwide. These purchases are separate from monthly government cash handouts, which currently amount to about $4.85 per person.
The goal is to slightly alleviate short-term pressure on families whose purchasing power has been eroding for years due to local mismanagement and comprehensive Western sanctions.
The government of late President Ebrahim Raisi, in office from 2021 to 2024, implemented electronic coupon schemes twice, in 2023 and 2024, for short periods to ease pressure. His predecessor, President Hassan Rouhani, also considered resorting to coupons after the United States withdrew from Iran’s nuclear deal with world powers in 2018 and imposed harsh sanctions.
On the other hand, taxing everything
The Pezeshkian administration, which lost two key members to a political dispute with hardliners last week, has been striving to cut costs and increase revenues to address a budget shortfall.
The government’s approved budget for the Iranian calendar year 1404, starting March 21, includes significantly higher taxes and service costs—in many cases exceeding Iran’s current 35 percent inflation rate.
Successive Iranian governments have been forced to find new revenue sources, including tax hikes, to reduce dependency on oil revenues, which have been severely impacted by the US’s “maximum pressure” campaign.
The Pezeshkian government revealed this month that 73 percent of its current expenses, excluding infrastructure costs, are covered by tax revenues.
According to a February report by Iran’s Parliament Research Center, total government tax revenues are expected to increase by 53 percent in the fiscal year 1404 compared to the previous year—the highest jump in a decade.
The budget anticipates a 73 percent surge in corporate income tax revenue and a 68 percent increase in personal income tax revenue compared to the previous year.
The parliament’s research body also forecasts a 36 percent rise in wealth and property taxes.
Import taxes are set to increase by 85 percent, partly due to higher revenues from the import of new or used foreign vehicles after a years-long ban was lifted in 2022.
During the holy Muslim month of Ramadan, restaurants and hotels must secure permits to operate while ensuring no one publicly breaks their fast by eating, drinking, or smoking—illegal under Iran’s Islamic laws.
Tax hikes follow Iran’s decision to raise the retirement age for men by two years to 62 and increase the years of service required for full pensions from 30 to 35. These measures aim to address alarming deficits in pension funds, which threaten financial sustainability and increase pressure on the government.
Amid another currency collapse and a lingering energy crisis, the embattled government has also been accused by hardline lawmakers of intentionally devaluing the national currency for short-term gains.
Making services more expensive
Alongside increased taxes, the 1404 budget makes many government services offered to Iranian and foreign nationals significantly more expensive while raising financial penalties for offences.
Fees for national IDs and passports are up, as are vehicle and motorcycle registration costs. Fees for university services and technical and vocational exams are also expected to rise.
With Nowruz prompting millions of Iranians to travel this month, authorities anticipate higher revenues from traffic fines, which will increase by up to 30 percent until early April.
Many major traffic offenses had their penalties tripled eight months ago, with additional hikes of 50 percent expected next year for dangerous or drunk driving.
Authorities also plan to raise departure levies by about 30 percent, with higher costs for repeated trips abroad.
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