Syria Table of Contents
The growth rate of proposed government revenues (in current prices) averaged 14.3 percent a year between 1964 and 1970, 26 percent a year in the 1970s, and 8.3 percent a year from 1980 to 1985. Growth in government revenues in the 1970s reflected higher levels of foreign aid because of Syria's key role in inter-Arab politics and increased internal borrowing for development. Government receipts included part of expected foreign financial assistance as well as anticipated domestic borrowing. Actual receipts for various revenue headings were not available, but many economists believed that actual receipts were substantially less than those shown in proposed budgets. Proposed government revenues increased from LS1.2 billion in 1964 to LS2.8 billion in 1970, LS10.4 billion in 1975, LS1.2 billion in 1978 and LS43 billion in 1985 (see table 6, Summary of Proposed Government Budget Receipts, 1983-85).
Syrian revenues were a much higher ratio of GDP than in most countries of the world because budget receipts incorporated the funds, including foreign aid and internal borrowing, used for the bulk of the country's investments. In fact, Syrian revenue structure differed from that of most countries in a number of ways. Personal income taxes have traditionally been low, amounting to only LS550 million, or 1.3 percent of total revenues, in 1985. Reluctance to tax income stemmed from generally low incomes combined with high tax-collection costs. Furthermore, tax rates were low, with numerous exemptions for special interests, despite a 1982 law enacted to close loopholes for certain public sector ventures. Tax evasion also was common among all social classes. Business income taxes were relatively small as well, amounting to 10 percent (LS4.3 billion) of total revenues in 1985. Even so, this amount was a significant increase over the LS510 million (3 percent of total revenues) collected in 1977.
In addition, taxes on capital, real estate, and inheritance yielded small sums. In 1985, taxes on capital brought in LS50 million, real estate taxes produced LS400 million, and inheritance taxes LS40 million, equivalent to about 1 percent of the total. Direct taxes and duties totaled LS6.24 billion in 1985.
Because they were easy to collect, levies on production and consumption (including taxes on imports) were the primary form of taxation. Like many other developing countries, Syria relied on indirect taxes, which in 1985 amounted to LS4.16 billion, 10 percent of total revenues, equal to two-thirds the amount of direct taxes and duties. Customs duties and other fees on foreign trade, including duties on cotton exports, amounted to LS2 billion in 1985. Excise taxes on several commodities (e.g., cement, fuel, livestock, sugar, and salt) made up the remainder of indirect taxes.
Transfer of surpluses (after taxes and profits) from public sector enterprises served as the main source of domestic revenue. The share of these transfers (excluding foreign aid and internal credits) reached 32 percent in 1970, 50 percent in 1976, and 31 percent in 1985 (LS13.1 billion). In the 1960s, banking-financial and industrial public sector businesses together provided the bulk of the surpluses. In the 1970s, industrial concerns alone accounted for 75 percent of the surpluses transferred to the budget; this figure declined slightly to 70 percent in 1985. In the 1970s and 1980s, the government increasingly relied on the pricing of commodities and services rather than taxes to finance expenditures. In an effort to expand future budget revenues, officials intended to increase efficiency, productivity, and profits of public-sector business.
Foreign credits and grants and domestic borrowing also provided supplemental funding for key development projects. The 1984 budget projected LS1.9 billion in foreign loans and LS7.7 billion in "support funds" from Arab states (see Balance of Payments , this ch.). After 1982, grants in oil aid from Iran also significantly contributed to the growth of revenues. However, when external aid declined in the 1980s, domestic borrowing levels increased. Although the banking system provided most of the internal credits, reserves of public enterprises also provided some funds.
Until 1977,transit fees for crude oil pumped through international pipelines across Syrian territory were an important source of revenue. Pipeline payments, which averaged about 25 percent of total domestic revenues in the early 1970s, fell to zero in 1977. The pipeline reopened briefly in 1979, was shut down in the early stages of the Iran-Iraq War, and then reopened again in 1981 before Syria closed down the pipeline from Iraq in 1982 as a show of support for Iran in the Gulf war (see Industry , this ch.).
Data as of April 1987
Syria Table of Contents