Iran Parliament Unlikely to Approve Departure Tax Increase

EghtesadOnline: The dramatic increase in the departure tax proposed by the government in the budget bill for the next fiscal year (starting March 21, 2018) has low chances of approval by the parliament, according to a number of lawmakers.

News ID: ۷۸۰۸۲۹

13 December 2017

As per the budget bill submitted by President Hassan Rouhani to the parliament on Sunday, the departure tax will see an almost threefold increase to reach 2.2 million rials ($52) from the current 750,000 rials ($17). The new fee is to rise by 50% for the second trip and 100% for the third and subsequent visits over a one-year period.

Fatemeh Zolqadr, a member of Majlis Cultural Commission, said neither the specialized not the joint commissions of the parliament are likely to approve the proposal, ICANNA reported.

"The logic that those who travel abroad are rich and must pay more for their trips is faulty," Financial Tribune quoted her as saying.

Zolqadr noted that although the increase would make no difference for the wealthy strata as they can afford even greater sums, it would put pressure on the middle-class who go on pilgrimage, business, education and occasionally leisure trips.

"These people will be adversely affected even if the government's revenue rises by more than threefold via the tax," she said.

According to government officials, parts of the earnings from the rise in departure tax are to be spent on developing tourism infrastructures and improving cultural heritage and handicraft sectors.

The current share of Iran's Cultural Heritage, Handicrafts and Tourism Organization of each departure tax is 100,000 rials ($2), which will increase to 400,000 rials ($9.5) following the enactment of the law.

"The tax is expected to generate 1.6 trillion rials for ICHHTO next year," Ali Asghar Mounesan, the head of the organization, said.

Zolqadr, however, noted that it is not the right solution and ICHHTO must increase its income through the development of inbound tourism instead of overcharging people to make up for its poor management.

Saeid Bastani, a spokesman of Majlis Industries and Mines Commission, also predicted that the law will not be ratified by the parliament.

He pointed out that up to 10 million people travel overseas each year for various purposes and it is not known how many travel for leisure.

"If the government's reasoning is that wealthy people who travel abroad must pay for their pleasure, why should all strata come under pressure?" he asked.

Qasem Ahmadi Lashaki, a member of Majlis Cultural Heritage Commission, has also called the proposal "irrational and unacceptable", adding that the Majlis will most probably change the law.

Further Opposition

Ebrahim Pour-Faraj, the president of Iran Tour Operators Association, also opposed the decision, calling it "a fine or a punishment" for those who travel abroad.

"Normally, we should be happy as a beneficiary of the 1.6-trillion-rial revenue, but we do not want such support," he said.

He suggested that the government should employ other methods to boost tourism, such as allocating 2% of the oil revenue to the sector for 10 years.

Arman Bayat, an aviation expert, told ISNA that the rule is against large-scale policies of the aviation industry.

"In most countries, taxes are distributed among all travel services rather than levying it all at one place," he said.

Besides, the rise in tax for the second and third trips will create a challenge since verifying the number of a passenger's trips could be a time-consuming process.

While trying to adopt a neutral stance, Mounesan regretted that the government did not seek the opinion of tourism experts when drafting the bill.

"Affordable travel should be available for all Iranians. I believe any decision should be in line with the economic conditions of the public. I wish tourism experts had been consulted," he tweeted.

Mounesan had said elsewhere that it is still not too late and his organization will spare no efforts to reform the figures.

Government's Rationale

Amid all criticism, Government Spokesman Mohammad Baqer Nobakht stated that the huge tax is a kind of "public participation to improve tourism infrastructure".

Speaking on a television program, Nobakht added that those who travel abroad now have the opportunity to help their own country's tourism industry.

Mahmoud Vaezi, the presidential chief of staff, justified the proposed hike in departure tax by saying the revenues will be spent on projects such as public health insurance and empowerment of low-income populations.

"Those who drafted the bill were obviously seeking to promote justice and help deprived groups," he said.

Vaezi added that the government has always paid due attention to public opinion and adapted its decisions to people's demands.