Iran merchants and extortionist tax collectors end standoff

A standoff between Iranian merchants and tax collectors ended Saturday as the two sides reached a compromise in a weeks-long on-and-off strike that had cast a spotlight on the economic troubles of a nation now facing tightened sanctions.

For weeks, Tehran's normally bustling Grand Bazaar had been eerily quiet and palpably tense as security forces stalked its dim galleries, the stalls of gold, jewelry, shoes and clothing that were shuttered under the pretense of painting their storefronts.

The strike followed a restructuring of Iran's tax system that had reportedly improved audit functions, bringing more revenue for the government of President Mahmoud Ahmadinejad, but aggravating bazaar business owners.

The government retreated from its original plan to increase direct income tax on individual businesses by 70%. A deal to raise taxes by 15% ended the strike, but hard feelings toward tax collectors continued.

"Every year we used to manage to convince the tax office to pay a 7% increase compared to the previous year," said one wholesaler in the fabric market, who spoke on condition of anonymity for fear of reprisal by security forces keeping a close tab on merchants. "Now it's 15%. It seems like the tax office is the winner."

Iran's bazaars aren't quaint provincial markets. They're big money. And the merchants represent a business class that has traditionally wielded a lot of political power in Iran. Their support was instrumental in overthrowing the U.S.-backed shah in the 1979 Islamic Revolution, and they continue to account for huge swaths of the Iranian economy.

"The bazaaris are among the few who still have a degree of collective identity to resist the sort of erratic behavior represented" by Ahmadinejad's proposed tax increase, said Farideh Farhi, an Iran analyst at the University of Hawaii.

"At the same time, they are no longer strong enough to engage in a full push-back," she said.

http://www.latimes.com/news/nationworld/world/la-fg-iran-economy-20100718,0,6841159.story

State repression

Iran merchants and extortionist tax collectors end standoff

Iran merchants and extortionist tax collectors end standoff

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