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Syria Revenues
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
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