Revitalizing Iran's Tax System for Social Welfare

Taxation is one of the most important and most common methods used for financing a nation and the world. Government services maximize the social welfare of the communities by reducing unemployment and inflation, delivering and securing public goods and services and by increasing income. The government of Iran will not be able to obtain a social development or welfare until it develops this type of infrastructure. Economic indicators must be promoted to increase revenue streams and it is difficult to create a culture where the citizens voluntarily and willingly pay taxes to support such a nation. In general, people think about how to pay less taxes at the end of the tax year and are reluctant to pay more than they have to pay. In Iran people have negative feelings about taxes and historically view tax agents negatively. Confidence is low in the tax system in Iran and measures should be developed to increase the people’s faith and create trust. The tax is a social share of those working and living within the society

Current problems include a small tax base and extended tax exemptions for the public. The culture of the people, along with a lack of awareness regarding services that are given by the government, lead to a low share of taxes collected. Tax revenues have not played as large a role in Iran’ economy because the country has instead relied upon revenues from natural gas and oil resources. Economic fluctuations affect tax revenues and it is unlikely to change in the current situation. When comparing Iran’s ratio of tax revenues to the nations GDP (7.3% in 2009) with other developed countries such as England (36%) , Germany (40%) and France (49%), Iran has the lowest percentage (Pourkiani, 2000000). The tax system in Iran is significantly underperforming compared to other developed