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Iran
ROLE OF THE GOVERNMENT
The central economic role of government in post-World War II
Iran has been the manipulation and allocation of oil revenues.
Since the beginning of the production of petroleum in commercial
quantities in the 1920s, government oil policies have reflected
the varying priorities of the different regimes and have exacerbated
economic and cultural cleavages within the society.
During the reign of Reza Shah (1925-41), oil revenues were modest,
and most of the proceeds from oil went to Britain through the
Anglo- Iranian Oil Company (AIOC). For its revenues, the regime
relied upon indirect taxes (customs duties and excise taxes) on
items such as tea and sugar. In contrast, after 1951, the government
of Mohammad Reza Shah (1941-79) relied on oil income to finance
the policies of centralization by which it was able to control
most aspects of Iranian society until nearly the end of the shah's
rule.
Reza Shah's regime financed its development programs through
modest oil royalties, customs revenues, personal income taxes,
and state monopolies. During his reign, oil production royalties,
although still low, quadrupled in terms of the rial (for value
of the rial--see Glossary); this money was spent on defense and
industrial development. Between 1926 and 1941, higher tariffs
boosted annual customs revenues from approximately US$5.6 million
to US$16.3 million. Institution of a small income tax replaced
the local levies and enabled the government to extend its influence
into the provinces; by 1941 the income tax provided annual revenues
of US$10.8 million. Finally, the government relied upon state
monopolies on consumer goods such as sugar, tobacco, tea, and
fuel, which contributed approximately US$46.5 million annually
by the early 1940s.
Data as of December 1987
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