BAGHDAD: Iraqi government sent to parliament a revised version of the 2018 budget bill for the fourth time Feb. 11. The budget proposal includes a new 10% tax on sales at commercial centers, restaurants and barbershops.
The government’s new tax policy comes as a result of Iraq’s 2015 agreement for a $5.4 billion loan with the International Monetary Fund.
This deal includes a reform of public finances (including the tax system) to collect 2.3 trillion dinars ($1.8 billion) under the 2018 budget through taxes imposed on telecommunications services, hotels, refreshments, cigarettes and alcohol, among other items.
In an interview with Al-Monitor, Madhar Mohammad Saleh, financial adviser to the prime minister, attributed the government’s new taxes to efforts to diversify the economy and end its reliance on oil. Saleh said, “Iraq ranks last in the world in terms of paying taxes — with the amount of tax paid equivalent to only 3% of GDP. Paying taxes is still alien to the Iraqi people.”
He added, “Paying taxes is a national duty so that every citizen could contribute to the state budget and these funds could be used for national projects that are of paramount importance to Iraqis, such as hospitals and infrastructure, among other development projects. … The imposed taxes are very low and will not pose any burden to citizens. Politicians need to find solutions to financial problems as the situation in the country is already difficult.”
The government began to impose taxes for the first time in the 2015 budget, namely Article 33, on prepaid mobile card and airplane tickets in the wake of the financial crisis that broke out in 2014, which is still ongoing. Those taxes were implemented because of low oil prices and the high cost of the battles against the Islamic State, which swept the north and west of Iraq.
