Opinion: Tax and Transparence

EghtesadOnline: Departure tax is a permanent fixture in many parts of the world for people travelling abroad. In some countries, both citizens and foreigners have to pay before moving out by air, sea or land.

News ID: ۷۸۵۳۱۲

26 January 2020

Iran is no exemption. This type of tax was first introduced in 1985 and has continued up until today. Almost every year, the exit tax rates have increased and are getting closer to rates in countries that are renowned tourist hubs where things are in their proper place.

Many governments and municipalities say they use the money for a variety of reasons, such as promoting cultural attractions and domestic tourism, improving transportation and renovating airports, seaports and border checkpoints.

After 35 years and counting, it would serve national interest if the Tehran government releases some data regarding how and where the departure tax has been spent.

After all, keeping taxpayers informed about how their money is spent is the duty of governments upholding the rule of law, transparency and accountability.

The international airport in the capital and in other major cities plus domestic airports leave much to be desired. Taxpayers apparently would want to know what policies and programs have been initiated to make Iran, with thousands of years of history, the place people from across continents would like to visit.

Rising Trend

As per the March 2020-21 budget bill, the government has set next year’s departure tax at 2.64 million rials ($20.22) for Iranians who take their first overseas trip in the year, 3.96 million rials ($30.34) for the second trip and 5.28 million rials ($40.45) for the third time or any number of times.

The rates show an increase compared to last year's.

Last year’s departure tax was 2.2 million rials ($16.8) for the first time, 3.3 million rials ($25.28) for the second time and 4.4 million rials ($ 33.71) for third time or more.

Notably, last year, the departure tax increased almost threefold compared to the year before.

Departure tax imposed on travelers to Saudi Arabia for hajj pilgrimage will be at 1.32 million rials ($10.11) next year.

Latest statistics provided by the Central Bank of Iran show the government earned 3 trillion rials (over $22.98 million) from departure tax in the first four months of last year (March 21-July 22, 2018). The figure showed a rise of 177.2% compared with the same period of last fiscal year.

Revenues from departure tax, which are a subcategory of indirect taxes on goods and services, were estimated to hover around 2.7 trillion rials (about $20.68 million) in the four-month period.

The target in the budget law for last year's revenues from departure tax was at 8 trillion rials ($61.3 million).

There is no available report as to how much of the target was realized.

President Hassan Rouhani submitted the budget bill for the upcoming Iranian year (March 2020-21) to the parliament on Sunday–a document which, according to him, is indicative of the country’s tenacity and resistance in the face of US sanctions.

The government's operating budget for the upcoming fiscal year as part of the bill indicates about 8% expansion compared to the corresponding figure in the budget law of the current year.

Yet, it's noteworthy to consider the inflation in Iran. The Statistical Center of Iran's latest report shows the average goods and services CPI in the 12-month period ending Nov. 21 increased by 41.1% compared with last year’s corresponding period.

Having said that, the next year's budget will be contractionary.

In view of budget constraints emerging from the imposition of unilateral US sanctions, the government has sought to reduce its spending while increasing its sources of income.

The rise in departure tax is one of those measures.

Comparison With Other Countries

A departure tax is a fee charged (under various names) by a country when a person is leaving the country.

Some countries charge a departure tax only when a person is leaving by air. Various rules apply to the payment of the tax, including payment at the airport to those about to catch a flight (sometimes only in the local currency and sometimes by credit card), or by some prepayment method, or it may be charged to the airlines and included in the airline ticket price.

The fee in the UK, for example, stands at between $16 and $240. It is at $10.5-63 in Germany, $8-39 in Austria, $6.50-43.10 in Sweden, $16 in China, $9 in Japan, $2-37.5 in Malaysia, $23.20 in Saudi Arabia, $22 in Thailand, $8.98 in Turkey and $45 in Australia.