By M.A. Saki 

Incompatible with justice

December 4, 2018

The details of the national budget bill for the next Iranian fiscal year, which begins on March 21, 2019, have not been released yet.

It is expected that this time both the administration and the parliament join hands to put a partial if not complete end to the heavily subsidized gasoline.
 
When approving the current year’s budget, the parliament voted against the administration’s proposal to increase gasoline price by 50 percent. The parliamentarians used the December 2017 protests as an excuse to vote against the price increase.

However, with the exit of the Trump administration from the 2015 nuclear deal and the return of illegal sanctions, the prices of almost all commodities, even basic food commodities such as milk and meat, have increased greatly and it is only gasoline which has remained at a fixed price. 

With the return of sanctions, which led to a sharp devaluation of the national currency, the trafficking of gasoline and diesel has increased. This problem existed even before the devaluation of the national currency, but it has surged greatly. Some figures now put the volume of gasoline trafficked to neighboring countries between 10-40 million barrels per day.

However, what is more, panicking is the rapidly rising consumption of gasoline in the country at the cost of national resources and incomes. 

In total, granting subsidy to water, electricity, household gas, diesel, and gasoline over long years has led to the waste of tens of billions of dollars and irreparable damages to the society in terms of health and depletion of resources. 

Yet, subsidized gasoline has been proving a nuisance to the national economy. It is not necessary to study economics to realize the repercussions of subsidized energy, especially gasoline. Surprisingly, the consumption of gasoline has reached the terrifying level of about 100 million liters per day. It means that in the 80-million Iranian population, on average, every citizen consumes 1.25 liters of gasoline every day.

Kazem Jalali, chairman of the Parliament Research Center, has said that about 60,000 billion tomans (about 14 billion dollars at the official rate) is being spent annually to subsidize gasoline. Jalali has said even the direct cash subsidy that is now being paid to millions of citizens is much lower than the sum spent to subsidize gasoline.

This amount of money that must be used to create jobs for the great number of jobless people and develop the economy is being somehow wasted. 

In a country like Iran, which champions “justice” as an important principle, wasting such a huge sum of money to subsidize gasoline is, in fact, an instance of injustice. Only those who use private cars are mostly benefiting from this subsidy. 

In a report on Nov. 24, the Donya-e Eqtesad newspaper said statistics by the central bank show that only 50 percent of families in Iran use private cars. This shows that the remaining 50 percent are being deprived of such a subsidy.

The wrong cycle of granting subsidy to gasoline has brought with itself chronic problems such as the production of fuel inefficient cars, air pollution, etc. But in the current situation that Donald Trump has started an economic war against Iran and created economic hardship for citizens, it is a strategic mistake to let this amount of money, which will undoubtedly continue to increase in its current speed, to be spent on subsidized gasoline.  

All those officials, either parliamentarians, ministers, top managers, presidents, and so-called experts, who through their votes, decisions or advice have let billions of dollars being spent on unnecessary subsidies, have in fact been doing harm to the economy and injustice to the poor and the lower middle class society. This policy has been unintentionally in sharp contrast to their slogan of helping the poor.

Now that the government has drafted the national budget and plans to submit to the Majlis for ratification, it is essential to partially, if not fully, free up gasoline prices and allocate the money to develop public transport system across the country and subsidize basic commodities which their prices have increased under the illegal sanctions.


  

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