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Income Distribution and Taxation Laws of Iran
Published online by Cambridge University Press: 29 January 2009
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Our perception of the world around us, both as to what it is and what it ought to be, is influenced by a variety of factors. Among such factors are the nature of training we have received and the philosophical outlook we have been exposed to in the course of our lives. To most of us, the manifestations and the impact, if any, of the ideas that we have thus formulated do not go beyond a small circle—our mates, children, friends, and associates. For a few, it can extend to a larger circle and at times to more than one generation. In one instance, however, the impact has encompassed a nation. The Shah's reform measures have not only affected the social, economic, and political life of Iran in this generation and generations to come, but it may have altered the destiny of the country in the community of nations.
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References
1 Marie Espirit León Walras (1834–1910) was born in Evreux, France. After graduation from school and several changes in his career, he was appointed to the Chair of Political Economy in the faculty of law at Lausanne in December, 1870, at the age of thirty-six. He retired from this position in 1892. He was the author of several books. The best known are éléments d'économie politique pure (Elements of Pure Economics) (1877), which was published in five editions through 1926, and Théorie mathématique de la richesse sociale (Mathematical Theory of Social Wealth) (1883).
2 Reza Pahlavi Aryamehr, Mohammad, The White Revolution (Tehran: Kayhan Press, 1967), p. 13.Google Scholar
3 William Jaffe writes, Walras' interest in taxation as an instrument of social justice led him to participate in an international taxation congress held at Lausanne in 1860. He made so excellent an impression that ten years later, when a chair in political economy was established at the University of Lausanne, Léon Walras was appointed on a trial one-year contract. He held the chair until he retired for reasons of ill health in 1892 and was succeeded by his disciple Pareto', Vifiedo, ‘Unpublished Paper and Letters of Leon Walras’, Journal of Political Economy, 43 (02–12 1935), 194,Google Scholar and Walras, Léon, Elements of Pure Economics, trans. Jaffe, W. (Homewood, Ill.: Richard D. Irwin, 1954), pp. 73–80.Google Scholar
4 For a review of the cooperative movement in Iran, see Freivalds, John, ‘Farm Corporations in Iran: An Alternative to Traditional Agriculture’, Middle East Journal, 26, 2 (Spring, 1972), 185–193,Google Scholar and ‘The Cooperative Movement in Iran’ in Echo of Iran, Iran Almanac (Tehran, 1971), pp. 281–283.Google Scholar
5 For instance, the present Turkish ‘government is pursuing a policy of income redistribution in favor of the poor’ (New York Times, 12 09 1974).Google Scholar
6 Kayhan, air mail edition, 21 Day 1353 (11 01 1975), p. 4,Google Scholar and ibid, 2 Shahrivar 2536 (24 Augest 1977). Besides the Shah and the prime minister, many lesser officials have referred to the topic. Two examples are an editorial, ‘Just Distribution of Wealth’, in Tehran Economist, XXII, 1034 (6 04 1974),Google Scholar and ‘Equal Income of Rural and Urban Areas’, Ibid., XXI, 1023 (19, Jan. 1974), 47. The objective had been included in the platform of the Mardom Party. The secretary of the Party announced that ‘increased wealth per se is not our objective. The main question is the increased welfare of the public. Therefore, the just distribution of wealth and greater distribution of income are our main goal’ (Ittilā'at, no. 1352), 7 Tir 1352 (28 06 1973).Google Scholar
7 A history that extends over more than 2,500 years excludes even the possibility of a discussion of the development of the taxation system in historical perspective. Furthermore, such an analysis would not be germane to the theme of this study. For general historical surveys of the Iranian taxation system, see Ahmadi, M. H., Tārihk-i Tattavur-i System-i Mālyāty dar dawrān-i Shāhanshāhy-i Iran (A History of the Evolution of the Taxation System throughout the Monarchy Era) (Tehran, 1350/1971),Google Scholar and Shāhpourian, A., BĪst-u Panj Sedeh Mālyāt (Twenty-five Hundred Years of Taxation) (Tehran, 1350/1971).Google Scholar For a very lucid description of the taxation system in the 1890s, which is the decade immediately preceding the 1906 Revolution, see Curzon, C. N., Persia and the Persian Question (New York: Barnes & Noble, 1966), pp. 468–527.Google Scholar
8 Shuster, W. Morgan, The Strangling of Persia (New York: Greenwood Press, 1968), chap. xi.Google Scholar
9 A major portion of the revenues was collected in kind which obligated the government to find the means of transporting the collected produce, storing it, and either converting it into money by sale or paying it out in kind for the expenses of government.
10 For further details of the events related to Shuster, besides his own narrative, see U.S., Department of State, Foreign Relations of the United States, 1911, (New York, N.Y.: Krause Reprint Corporation, 1969), pp. 679–682 and 685;Google Scholar and Kazemzadeh, F., Russia and Britain in Persia, 1864–1914 (New Haven: Yale University Press, 1968), pp. 582–594.Google Scholar
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12 The taxation law of 1949 was one of a series of comprehensive tax laws in the country. This legislation introduced a progressive income tax with the rates of 5 to 55 per cent and as such can be considered the prototype of the current legislation in Iran. For the text of the law and its four succeeding amendments, see MĪrsa'idi, M. A., Majmü'ih QavānĪn, ā'in-nāmehā, TasvĪbnāmehā, Bakhshnā-mehā… (A Collection of the Laws, Regulations, Decrees, Circulars, Directives and other Regulations Related to Taxation Affairs) (Tehran: Chamber of Commerce, Shahrivar 1339 [08 1960]).Google Scholar
13 In 1949 a Majlis representative criticized the inability of the government to collect taxes from the rich. He said that among those whose addresses are unknown, hence evading taxes, are Brigadier General Satvati and MrNemazi, M., a well-known wealthy citizen of Shiraz (Mozākerāt-i Majlis-i Shuray-i Melli (Parliamentary Records) session 3, Wednesday, 3 Esfand, 1329, A.H.D. [03 1949], no. 147, p. 3, column I.)Google Scholar In 1973 the same problem was discussed in Tehran Economist, XXI, 1002 (25 08, 1973), 1, 14,Google Scholar in these terms: ‘There are, however, those who under the present good economic conditions are reaping huge profits, but do not have any offices or known addresses to enable the tax collectors to reach them. The system of our tax collection is not capable of collecting taxes from the wealthy…’. Louis Krar touched upon the problem in these words: ‘Even some Western businessmen who have had a lot of experience with the ways of the Middle East are shocked by the scale of official corruption in Iran. Many tax collectors customarily accept undervalued declarations from corporations in exchange for a substantial gift of cash. Companies attempting to shun the practice usually get hit with an inflated tax bill…’ (‘The Shah Drives to Build a New Persian Empire’, Fortune, [10 1974], 184).Google Scholar
14 In that conference Mr. Hoveida stated that despite many changes in the taxation system and its collection methods, a situation has arisen where the burden of payment is on the shoulders of the lower income groups. He explained further that one of the purposes of the conference was to discuss the collection problem with the audience (Echo of Iran, Iran Almanac, 1963 [3rd edn; Tehran: 1963] pp. 290–291).Google Scholar For the views of one of the participants, MrKhosrowshahi, , president of the Tehran Chamber of Commerce, see his ‘Collection of Speeches’ in Andyshehāy-i Iqtissādi (Thoughts on Economics) (Tehran, Aban 1347 [10 1968]).Google Scholar
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16 Ittilā'at no. 1411, 13 Khordad, 1352 (3 06 1973).Google Scholar
17 For an explanation of the tax on inheritance in light of the Shah's speech, see Kayhan Hava'Ī (Persian edn), 26 Aban 1352 (27 11 1973).Google Scholar For the final version of the tax schedule, see Ittilā'at no. 14296, 12 Day, 1352 (2 01 1974).Google Scholar
18 For an analysis of the economic significance of the Islamic law of inheritance, among others, see Mannan, M. A., Islamic Economics: Theory and Practice (Lahore, Pakistan: Sh. Muhammad Ashraf, 1970), pp. 176–186.Google Scholar
19 The Imperial Government of Iran, Iranian Statistical Center, National Census of Population and Housing, 11 1966, Vol. 168, pp. 5 and 181;Google Scholar and Tehran Economist, Barrasy-i Būdjeh-y Khānevarhāy-i SharneshĪn-i Iran Dar Sāl-i 1346 (A Survey of the Budget of the Urban Households in 1967) [Tehran, 1348 (1969)], p. 10.Google Scholar
20 Bank Markazi Iran, Bulletin, various issues since 1964,Google Scholar and Majlis Shuray-i Melli, Legislative Department, Budget Acts of 1347, 1348 and 1349 as reported in Firoozi, Ferydoon, ‘The Iranian Budgets: 1964–1970’, International Journal of Middle East Studies, 5, 3 (06 1974), 337.Google Scholar
21 The New York Times, 5 09 1974.Google Scholar
22 This is not to deny the fact that the sample has not been subject to normal errors of sampling techniques and the willingness of the subject to respond accurately.
23 MĪrsa'idĪ, M. A., Majmū'ih QavānĪn, A'innāmehhā, TasvĪbnāmehhā, Bakhshnāmehhā Dastūrhā, Va Sāyer-i Muqararāt-i Marbūt be Umūr-i Mālyāty (A Collection of the Laws, Regulations, Decrees, Circulars, Directives and other Regulations Related to Taxation Affairs), Chamber of Commerce (Tehran: 1960), p. 163.Google Scholar
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25 The first three are actual figures and the last two are projected. See Shuray-i Melli, Majlis-i, Qānūn-i Būdgeh-y Sāl-i 1347 (The Budget Act of 1967–1968) (Tehran: Majlis Press, 1967), pp. 26 and 34;Google ScholarIbid., The Budget Act of 1969–1970, pp. 28–31.
26 Since the Land Reform Act of 1963 and the establishment of rural cooperatives in 1968, the practice of distributing land among all heirs has been changed in favor of giving title to the land or a share in the rural cooperative to the eldest son. The change is intended to prevent the division of land holdings into economically nonviable plots.
27 Goode, Richard, The Individual Income Tax (Washington: Brookings Institution, 1966), p. 285.Google Scholar
28 Krar, , ‘The Shah…Empire’, pp. 147–148.Google Scholar