Minister: Iraq eyes taxing mobile phone sales

Amid falling oil prices and war on ISIS, Iraq is aiming to tax mobile phone sales for the ‘first time’ in a bid to reduce its budget deficit

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Cash-strapped Iraq is aiming to tax mobile phone sales for the “first time” in a bid to reduce its budget deficit which reached 35 trillion dinars ($303 billion), its finance minister told Al Arabiya News Channel in an interview aired Friday.

“War on [Islamic State of Iraq and Syria group] ISIS has cost us billions of dollars which included arms deals and salaries of the volunteers [Iraqis who joined the army to fight ISIS] in addition to taking care of those displaced,” Hoshyar Zebari said.

Currently, there are about 2 million internally displaced people in Iraq. ISIS controls one third of Iraq.

Zebari said more than $800 million was spent on those volunteers backing the Iraqi army against ISIS, however there are many complaints that salaries were not received.

He said the upcoming 2015 budget will be about “lowering spending to reduce the deficit which reached 35 trillion Iraqi dinars.”

He added: “Probably more than 35 percent of [2015] budget will be spent on security and defense.”

The minister’s statement comes after he told Reuters that Iraq was seeking to postpone a final $4.6 billion installment of reparations for its 1990-91 occupation of Kuwait due falling oil prices and the war against ISIS.

Recently, the International Monetary Fund said Iraq’s economy was set to shrink in 2014 by 0.5 percent, its first contraction in at least a decade, and that its international reserves have fallen $10 billion so far this year.

The 2014 budget deficit is likely to reach 5 percent of GDP, IMF said.

Zebari said he hoped the government could agree a revised 2015 budget at a meeting on Sunday.

Despite oil’s fall below $70 a barrel, the finance minister said Baghdad will still base next year’s spending plans around that price, since the IMF was forecasting crude will average that level over the course of the year.

(With Reuters)