In a bid to achieve “justice in payment,” the Iranian regime is set to implement sweeping changes to household tithing, aiming to make subsidies more targeted. This initiative, as reported by ISNA news agency, involves a comprehensive review of household data and per capita income, including individual and family salaries, vehicle ownership, bank accounts and transactions, ‘Satna’ and ‘Paya’ accounts, stock market activity, and more.
A Controversial Plan
Many experts believe that the regime’s plan is a double-edged sword: while it aims to increase subsidies for the most impoverished segments of society, it simultaneously seeks to exclude a significant number of recipients from the subsidy payment system. The state-run newspaper Donya-e Eghtesad highlighted that some individuals, due to their job conditions, exhibit high account turnover, placing them in the top decile in household economic analyses.
The regime’s persistence in reforming the tithing system comes in the wake of a rising number of households falling below the absolute poverty line. This surge has compelled the government to increase subsidies for the lower deciles, exacerbating the regime’s budget deficit.
The Genesis of Livelihood Subsidies
Livelihood subsidies were introduced into Iran’s economy in the fall of 2023. According to the regime’s Plan and Budget Organization (PBO), 18 million households, amounting to a total of 60 million people, were deemed eligible for subsistence subsidies to aid in food preparation. At that time, Hossein Mirzaei, the spokesperson of the ‘Headquarters for the Identification of Beneficiaries of the Livelihood Support Plan,’ stated: “82.1% of households in Sistan and Baluchistan, 79.2% of households in North Khorasan, 78.4% of households in South Khorasan, and 57.2% of households in Tehran received a livelihood support basket.”
Escalating Inflation and New Subsidies
As poverty deepened and inflation continued to soar, the regime introduced new subsidies. However, experts quickly pointed out that these measures were unlikely to enhance people’s purchasing power and warned of their inflationary consequences.
The severity of poverty in Iran has reached alarming levels. The director general of the ‘Office of Support and Empowerment Affairs’ of the Ministry of Cooperation, Labor, and Social Welfare announced that in April 2024, 600,000 tomans would be paid as part of a plan called ‘Yesna.’ This payment was intended for households with pregnant mothers or infants under two years of age in the second and third deciles, funded by credits from 2023.
Widening Class Gaps
The newspaper ‘Sharq’ reported that two simultaneous events in Iran’s economy—rising inflation and declining social welfare—have exacerbated the class divide. This governmental approach faced criticism from economic activists. On November 25, 2023, Pedram Soltani expressed his concerns on X (formerly Twitter), questioning, “What is the message that 93% of the people have been recognized as eligible for subsidies by the government? Has poverty reached the tenth decile?”
The Growing Poverty Crisis
The regime’s parliament Research Center addressed the burgeoning poverty crisis last year, revealing in an extensive report that Iran’s poverty rate had surged from 19% to over 30% within a decade. This report also noted that the poverty gap, which measures the distance between the poor and the poverty line, had reached a peak of 27% in 2020 and 2021.
Experts attribute the intensification of poverty and the decline in economic power to several factors: the absence of a scientific and practical economic program, the impact of international sanctions, the regime’s allocation of resources to non-developmental uses (such as supporting proxy groups and militias in the region), and a focus on nuclear energy over balanced economic development.
Public Discontent and Government Response
On July 14, 2024, a conversation aired on regime-controlled state TV between Abbas Fadaeli and Khodayi, discussing the demands of social security from the government. Amid their debate over the Social Security Organization’s debts and claims, the moderator highlighted the dire conditions faced by the populace, stating, “It is a general feeling that people feel that social security services and subsidies do not meet 90% of their needs.”
Conclusion
As Iran grapples with escalating poverty and a widening economic divide, the regime’s subsidy reforms have sparked widespread debate and concern. The government’s efforts to redistribute subsidies more effectively may provide some relief to the poorest segments of society, but the broader economic challenges and criticisms of these policies underscore the complexity of addressing poverty in Iran. The nation stands at a crossroads, with its economic future hanging in the balance.
