Iran backs down on tax hike after merchant protest
Associated Press / Nasser Karimi

TEHRAN, Iran — Protests by merchants in Tehran's main bazaar forced authorities to back off of plans to increase taxes on their businesses, Iranian media reported Wednesday, in a sign of the government's difficulties in implementing economic reforms.

The Iranian government has been trying to find ways to boost revenue amid low oil prices and to improve the country's ailing economy. But it has had to be cautious in the face of widespread public discontent over inflation and other woes.

On Tuesday, merchants in Tehran's main bazaar gathered in protest over reports of a government plan to dramatically increase taxes on their businesses, newspapers reported. Some of them closed down their shops in protest and there were threats of a general strike in the bazaar.

After the protests, Finance Ministry officials and merchants met and reached a deal leaving their taxes at the 2008 rate, which ranges from 6 to 15 percent, state TV reported.

The government has talked of raising the taxes on businesses, saying they give to little to the national coffers, and there have been reports that it planned to increase the taxes to as high as 25 percent. Many shopowners complain their income has dropped amid the global economic crisis and they cannot afford more taxes.

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