Pay Your Taxes

Iran’s President Rouhani confronts powerful conservatives. “He’s in for a big fight, a fight that others, such as Khatami and Rufsanjani, fought and lost.”

Iran’s economy has been limping badly. The U.S.-driven sanctions imposed because of Iran’s nuclear program have curtailed its oil exports and cut off its banks from global financial networks. A 58 percent oil price slump since June has done damage, and the government is revising a draft budget that will lower the assumed price of oil to $40 a barrel from $72. The budget for the year ending in March was based on crude at $100 a barrel. After contracting 5.6 percent in 2013, the economy probably managed just 1.5 percent growth in 2014, according to the International Monetary Fund.

To make up for lost growth, Iran’s President Hassan Rouhani has called for conglomerates controlled by the Islamic Revolutionary Guard Corps and conservative religious foundations to give up their tax-exempt status and pull their weight. Although the Parliament backs Rouhani, he faces powerful groups including the Guards and Setad, a holding company controlled by the office of the Supreme Leader Ayatollah Ali Khamenei, Iran’s highest authority. Setad holds large stakes in the telecom and petrochemical industries, among others. The businesses run by the Guards and the clerics account for about a third of Iran’s economy. “We are trying to tax everyone across the board, but as soon as we touch this or that institution, they make such a stink about it,” Rouhani told business leaders in a Jan. 4 speech. “Just be aware that in some cases the domestic political lobby is very strong, very strong, more than you think.”

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