Teaching Comparative Government and Politics

Tuesday, August 03, 2010

Not mere shopkeepers

The bazaaris in Iran have been more politially powerful, but they still pack some clout. How will they use the power they still have?

The bazaar strikes back

WITH its shutters down and shops closed, Tehran’s usually bustling Grand Bazaar has been quiet of late. In the first weeks of July Iran’s powerful merchants went on strike because the government tried to raise their annual income tax by 70%. Even when the government hastily agreed to lift taxes by only 15% after the protests spread to other cities, businesses stayed shut for several days.

[left, Tehran bazaar, photo by zongo69]

The strikes have now ended but the threat of big reforms to Iran’s tax system still looms over the bazaar. Merchants argue that as the economy slows and inflation increases, they should pay less, not more, in taxes. But with lower oil prices, the government wants more money from a wealthy group that at the moment pays relatively little. Iran imposes valued-added tax (VAT) at 3% on large corporations but not on smaller and unincorporated businesses, so until now many of the bazaaris have escaped. The administration wants that to change…

The bazaaris’ power has dipped since the 1970s….

Their political backing is important too. In the past, dissent among the bazaarishas often gone along with political upheaval. Their abandonment of the shah helped the Islamist revolutionaries prevail in 1979. But in recent years some of the bazaaris have gravitated towards the reformists…

Strikes in the bazaar have been rare. This is only the second since the revolution. The first was in 2008 when President Mahmoud Ahmadinejad’s government first proposed VAT. The bazaaris may not be allied to Mr Ahmadinejad’s political opponents, but their disgruntlement means that the president is obliged to fight on yet another front…