Where does the money go?
BAGHDAD TODAY INVESTIGATES: IRAQ’S BUDGET HAS NO DEFICIT… REVEALING THE “FIGURES” THAT CITIZENS ARE NOT MEANT TO SEE – URGENT
(Mnt Goat: As I have said previously that Iraq has no deficit only stolen money. This article takes a hard look at the revenue streams.)
From the moment the new tax and fee decisions on seaports were announced, a wide wave of questions erupted among citizens and economic experts: Is the real goal to maximize non-oil revenues, or to strangle Iraq’s only seaport and push traders towards alternative ports in neighboring countries?
Behind this question lies a simpler and more sensitive hypothesis: Before talking about new taxes, where does the money collected daily from ports, border crossings, communications, electricity and other sectors actually go, money that is supposed to compensate for part of the state’s dependence on oil?
(Mnt Goat: The government also told us years ago that these fees could rival the oil revenues but ONLY if they can be controlled and put into the Federal coffers. This article is telling us there are enormous non-oil revenues streams but wher is all the money going? Certainly not in the Federal coffers.)
The figures that the citizen do not see in the budget
The Ministry of Finance’s data for 2024 indicates that Iraq’s total revenues during the first nine months amounted to about 114.3 trillion dinars, of which about 101.9 trillion dinars were from oil, compared to only about 12.4 trillion dinars in non-oil revenues, i.e., between 10-11% of total revenues, while the share of oil remained at around 89%.
If this path is approximated on the basis of a full year, the actual annual non-oil revenues are calculated to be around 16-17 trillion dinars, which is much less than what the budget tables assumed for the non-oil revenue sector, where the estimates and ambitions were much higher than reality, before the figures proved that the actual collection fell far short of the plan.
In contrast, the three-year budget projects annual spending exceeding 210 trillion dinars, with a planned deficit of around 63-64 trillion dinars. This means that any significant improvement in non-oil revenues could transform the fiscal deficit within a few years, if it were to shift from an uncontrollable “structural” deficit to one that could be managed through reforms rather than continuous borrowing.
The port is not zero… a revenue map within the maritime system
Iraqi ports are not merely gateways for containers and goods; they are a complex system involving dozens of entities, companies, and fees. On paper, this system is supposed to be a significant source of non-oil revenue, but reality raises more questions than it answers.
Direct and indirect revenues associated with the port include – but are not limited to – the following items:
Revenue of the water transport company.
Revenue of the land transport company related to the transport of containers and goods to and from the port.
Revenue of the container cleaning company.
Revenue of the Standardization, Quality Control, and Laboratory Testing Authority.
Revenue of dock handling companies.
Revenue from container storage fees at the docks, which many traders describe as “exorbitant.”
Revenue from half of the fines imposed on shipping companies.
Revenue from berthing and dock usage fees.
Revenue of the free zone.
Revenue from vehicle entry permits to the port. Revenue from
customs declarations.
Revenue from weighbridges (load scales).
Revenue from sonar and radiation scanning equipment.
Revenue from security and technical inspection of goods.
Revenue from electricity consumed by refrigerated trucks within the port.
Revenue from companies managing truck entry and the preemptive yard.
Revenue from handling and exporting special petroleum products.
Most importantly, the potential revenues from activating the international TIR system, which could make Iraq a regional transport hub and increase the volume of transit containers and related revenues to several times the current situation.
With this amount of fees and revenues, the question becomes legitimate: Why does the citizen feel that the state is “poor” whenever it needs to cover a deficit, while there is a sea of money within the port system alone, and no one knows where its entire flow is going?
From “maximizing revenues” to maximizing the burdens on the citizen
The government’s rhetoric often focuses on the phrase “maximizing non-oil revenues,” but implementation usually begins with the citizen’s pocket and ends with the politically easier sectors, such as:
-New taxes on imports.
-Additional fees at ports and harbors.
Taxes and fees on phone and internet cards.
-Various fees apply to transactions, permits, and official records.
The paradox is that the question is not posed as follows: Has the state really exhausted all possibilities of collecting revenues from outlets, ports, communications, electricity, state property, and internal taxes, before turning to new taxes that burden imports, trade, and market activity?
In the ports sector alone, complaints from traders and business owners are repeated, stating that:
-Customs and tax fees are rising without any clear justification for the service or the time required for the transaction.
-Storage, handling and fines costs make the port less competitive compared to neighboring ports.
–Part of what is paid does not actually reach the state treasury, but is leaked through intermediaries and unofficial fees.
With the new taxes being presented as a purely “financial” step, many are wondering: Are we facing a genuine attempt to build a sustainable non-oil revenue base, or are we facing hasty decisions that will drive investors and traders away from the Iraqi port and make them look for alternative outlets?
Is Iraq’s only sea outlet being choked off?
Part of the popular and political debate revolves around a sensitive hypothesis: Could the current fees and taxes turn the Iraqi port from an “opportunity” into a “burden,” effectively serving competing ports in neighboring countries?
A trader who sees the cost of a container at an Iraqi port is higher than at a nearby port will not question the state’s economic philosophy, but will simply choose the cheapest and safest route. Over time, the high fees become an incentive to avoid the national port, rather than a means of building sustainable revenue.
In this context, the following questions become urgent:
Has the impact of the new taxes on the volume of goods entering through the port been assessed over one or two years?
Is there a comparative study that shows how many containers were diverted to other ports due to the high costs at the Iraqi port?
-Were the contracts of the companies operating within the port – transportation, handling, storage, organization – reviewed before imposing any additional costs on the trader and the consumer?
If the answers are vague or absent, it means that the financial decision is being made in isolation from an integrated vision of maritime transport and foreign trade, which opens the door wide to doubts and accusations.
The bigger picture: The port is a model for the rest of the non-oil sectors.
The port is just one part of a larger picture. The same questions could be asked today about other sectors that are supposed to be revenue streams, not burdens on the budget:
Communications and Internet: a market worth billions of dollars annually, but the citizen does not know exactly how much the state collects in taxes, fees and privileges, and how much is lost due to the lack of transparency or weak negotiation with companies.
Electricity and billing: Millions of subscribers, government and private billing, technical losses and thefts, and a blurry final picture about: How much actually enters the state treasury as a result of all this?
Customs and land ports: Frequent complaints about customs evasion, fictitious invoices, and a large discrepancy between what is supposed to be collected according to the volume of imports, and what is actually recorded in official reports.
State property and real estate taxes: lands, properties and buildings that are rented or exploited in unclear ways, with the absence of a comprehensive survey that shows the amount that the state could gain if it only reorganized this file.
In all these sectors, one idea stands out: there are revenues already on the table, and what is needed is not the invention of new taxes, but rather a state that knows how to collect what is due to it and closes the loopholes for leakage and corruption.
How much could non-oil revenues add to the budget if they were seriously collected?
If the discussion moves from generalities to approximate figures, a rough picture can be drawn as follows:
Available figures indicate that actual non-oil revenues currently hover around 16-17 trillion dinars annually (taxes, fees, customs, various official levies).
Previous parliamentary and international estimates spoke of losses in ports and customs alone amounting to approximately USD 10-12 billion annually, or between 13-16 trillion dinars, due to evasion, corruption and partisan control over the crossings.
Accordingly, a realistic – not ideal – scenario for regulating ports and collecting revenues could push annual non-oil revenues to a level of 25-30 trillion dinars within a few years, meaning an increase of at least 10-15 trillion dinars over what is currently being collected, even before developing revenues from:
Telecommunications and internet companies.
-The civil aviation sector, airports and navigation fees.
-Municipal fees, electricity, water and waste.
-Direct and indirect taxes on income, profits and real estate.
Conversely, one economist points out that allowances and salaries for special grades consume approximately 2 trillion dinars annually, while the cost of basic salaries within these grades does not exceed 400 billion dinars. The remaining 1.6 trillion dinars goes towards allowances, privileges, and associated expenses. This means that eliminating the allowances and maintaining basic salaries could save the state approximately 1.6 trillion dinars annually from a single, clearly defined area of expenditure.
In practice, the equation can be simplified as follows:
Today approximately:
-Oil: More than 100 trillion dinars annually.
Non-oil: approximately 16-17 trillion dinars.
Under reasonable conditions within 3-5 years:
Non-oil revenues could approach 25-30 trillion dinars, an estimated increase of between 10-15 trillion dinars annually.
-With the addition of savings from the cancellation of special grade allocations (about 1.6 trillion dinars), the total potential improvement in the budget situation rises to about 16.6 – 21.6 trillion dinars annually between an increase in revenues and a reduction in spending.
This means that adding between 16.6 and 21.6 trillion dinars annually to the budget is not a numerical dream, but a realistic goal if the system of evasion and corruption in the ports and taxes is dismantled, the collection system is modernized and linked electronically, and unjustified privileges at the top of the spending pyramid are eliminated.
With the current fiscal deficit hovering around 63-64 trillion dinars annually, improving the budget by this amount (between 16.6-21.6 trillion dinars) could:
The theoretical deficit is reduced to approximately between 41 and 47 trillion dinars annually.
-It reduces the state’s need for internal and external borrowing.
-It creates a wider margin for financing investments instead of burning most of the budget on salaries, subsidies and high privileges.
What do we need to do to make the deficit disappear instead of remaining chronic?
Controlling the outlets and abolishing special grade allocations will boost the budget by 16.6-21.6 trillion dinars annually, but eliminating the deficit, which currently hovers around 63-64 trillion dinars, requires a broader package of three parallel fronts, without transferring the cost to the poor classes:
Further maximization of non-oil revenues: If reform is limited to the ports, non-oil revenues can be raised to 25-30 trillion dinars. However, with serious reform in the telecommunications sector, genuine taxes on large profits, and fees on luxury real estate and non-essential goods, this figure could theoretically be gradually pushed towards 35-40 trillion dinars, representing an additional 10 trillion dinars on top of the initial increase, without affecting people’s daily livelihoods.
Reducing waste in operational spending and fictitious projects.
Reviewing the top allocations file alone is not enough. If unnecessary operational spending (travel, committees, rent for unused government buildings, inflated service contracts, stalled projects) is gradually reduced by 10-15% of total operational spending, at least 10-15 trillion dinars can be freed up annually, without touching the salaries of low-income employees or social safety nets. The energy and gas sector must be reformed instead of being literally burned off.
Iraq still imports a portion of its fuel and energy needs, while flaring billions of cubic meters of associated gas annually. Converting this gas into electricity and domestic fuel production, reducing imports, and establishing genuine partnerships in the petrochemical sector could collectively save and add between 5 and 7 trillion dinars annually, whether in the form of additional revenue or reduced import costs.
If this package is combined with the previously discussed increase in non-oil revenues and the adjustment of special grade allocations, we will be faced with an overall improvement in the budget situation that could theoretically reach the following limits:
16.6 – 21.6 trillion dinars (outlets + special grades)
Plus 10 trillion dinars (further maximization of non-oil revenues)
Plus 10-15 trillion dinars (reducing waste in operational spending and fictitious projects)
Plus 5-7 trillion dinars (Energy and Gas Sector Reform)
This total ranges approximately between 41.6 and 53.6 trillion dinars annually, a figure very close to the current total deficit of 63-64 trillion dinars. This leaves a theoretical deficit of 10-20 trillion dinars that can be addressed with improved oil prices or a reprioritization of investment spending, instead of the “black” deficit that consumes every new year.
What needs to happen before any new tax is implemented?
From a regulatory and media perspective, the following questions should be posed to the government before proceeding with taxes and fees that burden the port and sensitive sectors:
-A detailed annual public statement of non-oil revenues.
How much revenue is collected from ports, border crossings, communications, electricity, taxes, and state property, how is it spent, and what is the size of the deficit and surplus?
-Clarifying the actual impact of the new taxes on trade and final costs for the importer and consumer, through published studies, not through general slogans. -Reviewing the contracts of companies operating within ports, outlets and service sectors before imposing any additional costs on citizens and merchants.
-Linking any new tax to a tangible success story, such as developing port infrastructure, speeding up clearance, reducing container dwell time, or expanding the application of the TIR system and transforming Iraq into a real transport hub.
Without these steps, the popular impression will remain the same: whenever the state is unable to control its real resources, the easiest way is to knock on the taxpayer’s door, instead of opening files on wasted revenues in ports and other sectors.
