Why Lift Partial Government Support?, 2 APRIL

 Why Lift Partial Government Support?

 
Economical 04/01/2024  Yasser Al-Metwally
 
Why lift partial government support?   Is it linked to public finance reform? 
The recent government decision to raise gasoline prices sparked widespread controversy and analyzes went in various ways.
 
Let us discuss the matter from the economic point of view of the decision, and based on our first reading of it, it became clear that
 
it was consistent with the vision and requirements of the International Monetary Fund, which stipulates that in order to achieve reforms, increasing government support by adopting tax policies that help diversify sources to enhance annual budgets.

From this standpoint, on which all capitalist and socialist theories are based, the process of capital turnover  aims to redistribute income fairly among segments of society.
 
This requires 

     imposing tax policies and 
     enhancing and 
     diversifying state revenues,
 
but these procedures are applied in countries that enjoy high stability.
 
Therefore, the timing of this decision may be considered inappropriate for the complex circumstances that the country is going through, especially market instability and structural distortions in the image of the Iraqi economy.
 
This is accompanied by a weakness in the economic culture that makes any decision regarding support face dissatisfaction.
 
Perhaps the reason for this weakness in the economic culture is due to the lack of transparency in the directions of tax revenues and their spending.
 
It is known that the capital cycle is based on the adoption of tax revenues, as I mentioned above, and
 
it goes in two important areas, the first of which is the
 
     redistribution of income among citizens according to their standards of living, and the second is that one of the
 
     government’s duties is to provide services in exchange for the amount of taxes it receives from taxpayers.
 
This is how economic theory works in all countries of the world.
 
The lack of transparency means the lack of clarity about the
 
     size of tax revenue in the budget and the
 
     ways of distributing it among services, as well as its
 
     support for vulnerable segments.

This absence resulted in a weakness in the economic culture and its depth among the citizen,
 
which makes him not accept any decision related to increasing taxes or removing government support because
 
 he is not aware of the directions of spending this money, which should go towards providing the best services to him.

The instability of the exchange rate along with the stability of wages and salaries leads to an impact on purchasing power.. How?
 
This is because the Iraqi market is accustomed to exploiting rumours.
 
Any decision is exploited by some merchants, thereby raising prices, and
 
the effect of this is to create dissatisfaction,
 
which is sometimes exploited by some at a time when the government has begun to find preliminary solutions, gain the satisfaction of the citizen, and talk about truly tangible achievements.
 
Therefore, we see the necessity of postponing the implementation of this decision until another time when
 
     market stability and prices are achieved and the
 
     standard of living improves and until the
 
     citizen witnesses the results of the government’s efforts in implementing broad government service projects on the ground, which is nothing more than a point of view.
 
Then we, the economic media community, can convince the citizen that these projects require that he contribute to their perpetuation through his compliance with correct and sound economic decisions.     
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