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Saleh: Customs taxes constitute 3% of GDP

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Saleh: Customs taxes constitute 3% of GDP

Financial Adviser to the Prime Minister, Dr. Mazhar Muhammad Salih «Economy News»
money and business
Economy News - Baghdad


The financial advisor to the Prime Minister, Mazhar Muhammad Salih, said that taxes in all their forms constitute only 3% of the gross domestic product in Iraq, and it is the lowest in the world.

Saleh added in an article published on the Iraqi Economists Network website and seen by "Al-Eqtisad News", that taxes in Iraq, whether direct, such as income and property taxes, and indirect, such as customs taxes, constitute only a percentage of the gross domestic product that does not exceed 3%, which is the lowest in the world compared to In neighboring oil-producing countries, some of which reach 30% of the gross domestic product."

He pointed out that "the income tax on government taxpayers did not constitute annual tax revenue except between 450-500 billion dinars."

He explained that "the income of government employees that exceeds 5.4 trillion dinars per month is not subject to income tax except the nominal salary, and that the income tax law is subject to annual accounting for all sources of income."

He pointed out that "the tax is currently calculated only on the nominal salary, which constitutes only 34% of the employee's income, while 66% of the job income is unique to the tax-exempt allocations, especially the job grades that are confined between the fourth and first job grades, at a rate of 70%. From the total allowances plus special grades upwards.

He continued: "Financial events in the year 2020 revealed that the critical operating expenditures exceeding 7 trillion dinars per month, the bulk of which come from oil revenues, at a rate of 90%. اسعار

And when oil prices collapsed in the same year, the fixed-cost operating arm of government spending took to absorb the available oil revenues, preceded by salaries.

And pensions, grants and subsidies in the operating budget at a rate of 20% meaning salaries remained in need of 120% النفطية of the revenues of the oil budget in order to feed its monthly payments without the other operational periods.

And that "the salary difference in the year 2020 was funded from internal borrowing from the Central Bank of Iraq at the time and with an intensity of quantitative easing (printing of local currency) that the country had not seen before after the year 2003."

He stressed that "the internal borrowing of the government increased by the end of 2020 to the 23 trillion dinars, and the total debt reached 66-70 trillion dinars."

He added that "the goal of the financial policy when drawing the features of the budget in the year 2021 was to work on two different taxes imposed simultaneously; Financial."

And he continued, "The second tax that adopts monetary adjustment, which extended towards reducing the exchange rate of the Iraqi dinar and the shift in monetary policy from the philosophy of expensive cash to the philosophy of cheap cash, at a rate of 23% and this is what was actually achieved as an inflated tax paid by those with fixed incomes, in particular from the recipients of wages and salaries. And pensions, grants and subsidies in the government sector, in addition to contractors, criminalization and earning in the private sector."

Number of observations 410 date of addition 04/18/2021

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