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Iraq tax revenue up 16 pct in 2008, still paltry

BAGHDAD, Dec 31 (Reuters) - Tax revenues in Iraq jumped 16 percent in 2008 to around $430 million, the government said on Wednesday, but taxes still account for just a tiny fraction of government revenue in a nation almost entirely reliant on oil.

Tax revenues from various sources totalled more than half a trillion Iraqi dinar, around $430 million, an increase of 16 percent from the previous year, Talib Muhsin Abu Jaela, head of the Public Tax Commission, said in a statement.

That amounts to just over $15 a person, a puny tax take for a middle-income country.

He said expectations for 2009 tax collection would be determined by not only internal production and monetary and economic conditions but also Iraq’s security situation.

After almost six years of war, violence has dropped sharply in Iraq, but suicide bombs and other attacks are still routine.

The International Monetary Fund warned earlier this month that plunging oil prices pose a threat Iraq’s economic outlook as the country struggles to rebuild and create jobs.

Prices of oil, exports of which account for over 90 percent of government revenue, have tumbled from a high in July above $145 a barrel to under $38 a barrel on Wednesday.

The government of Prime Minister Nuri al-Maliki has already slashed spending plans, and may have to do more.

In comparison to oil, Iraqi tax income barely registers.

In 2008, according to the IMF, direct and indirect tax revenue represented just 1.1 percent of GDP. In 2009, that is expected to rise to 2 percent.

Iraq’s oil sector dwarfs other industry in Iraq, whose private sector was starved during years of sanctions and isolation under Saddam Hussein and which has been weakened even further during 2003.

Poor tax collection is also a problem. Since 2003, most Iraqis have paid little tax at all.

In the statement, Abu Jaela encouraged Iraqis to pay their taxes promptly and said tax evaders would be punished. (Reporting by Missy Ryan; Editing by Chris Pizzey)

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