Coll 28/3(2) ‘Persia. Financial situation.’ [‎385r] (769/817)

THIS DOCUMENT IS THE PROPERTY OF HIS BRITANNIC MAJESTY’S OOtEIfflMBSt,
EASTERN (Persia).
CONFIDENTIAL.
[E 2591/211/34]
9707
£/ oO
! '
April IX, 1939.
959 J
Section 1.
Copy No.
115
Mr. Seymour to Viscount Halifax.—(Received April 11.)
(No. 80 E.)
My Lord, Tehran, March 16, 1939.
WITH reference to Mr. Butler’s despatch No. 93 E. of the 9th March, 1938,
I have the honour to transmit to your Lordship herewith extracts^) from the
</ ournal de Tehran giving details and estimates of the budget for the Iranian
year 1318 (the 22nd March, 1939, to the 21st March, 1940), which was approved
by the Majlis on the 5th March.
2. For the first time since 1928—29 a deficit is revealed, which is larger than
the total expenditure in 1928-29. Estimates of expenditure in the coming year,
apart from credits from State reserves in sterling, amount of 2,613,481,987 rials
(£32,668,525 at the official rate of 80 rials to the £), and revenue is estimated at
1,930,096,700 rials (£24,126,210), leaving a deficit of 683,385,287 rials
(£8,542,316).
3. On the revenue side it will be noted that receipts from the sugar and tea
monopoly tax, as well as the road tax, are now included in the ordinary budget,
increasing the revenue from customs and from monopolies.
4. Lomparative lists of the chief sources of revenue and of the chief
headings of expenditure herewith transmitted show the increases over the
hgures of the previous budget. Attention may be drawn to the estimated increase
in indirect taxation, though direct taxation remains at the same figure.
Estimated revenue from industries is increased by 20 million rials from the tar
and sleeper factory An East India Company trading post. , 10 million rials from “ Factory An East India Company trading post. No. 5,” which is thought to
be the gas mask factory An East India Company trading post. , and 10 million rials from the glycerine and soap factory An East India Company trading post. .
5. On the expenditure side, the outstanding increase is for roads and
communications, the new estimates amounting to 853,550,000 rials (£10,669,376),
or about 33 per cent, of the total expenditure. A sum of 150 million rials
(£1,875,000) for the Administration of Mines and for iron and brass foundries
brings the estimates for the Ministry of Industry and Mines to 455,430,000 rials
(£5,693,000), or about 17 per cent, of the total. Sixty million rials have been
added to the estimates for the Ministry of War, bringing the total up to
415,408,380 rials (£5,192,600), representing about 16 per cent, of the total
expenditure: to this may be added the credit out of reserves of £2 million.
6. To meet the declared deficit it is stated that 140 million rials will be
available from the sale of the cotton mill at Behshahr (late Ashraf), which, it is
understood, has been purchased by the Shah, payment to be made by instalments.
A further sum of 160 million rials “ en devises etrangeres ” is to help to diminish
the deficit: it would appear that half of this sum (or £1 million) is to come out
of reserves—out of which £2 million has already been earmarked for the Ministry
of War and £1 million for the railway and ports. The other half is to be raised
by long-term credits. The rest of the deficit is to be covered bv unforeseen receipts,
revenue from commercial enterprises of the State and by borrowings from banks
in the country. I have heard of the possibility of an increase in income tax on
large profits, that‘is to say, that the present rate of 4 per cent, on such profits may
be raised considerably.
7. A copy of the Bill for the supplementary law to the budget, published on
the 9th March, is also furnished herewith^ 1 )
8. A copy of this despatch is being sent to the Secretary to the Government
of India in the External Affairs Department and to the Department of Overseas
Trade.
I have, &c.
H. J. SEYMOUR.
[580 1—1]
( l ) Not printed.