Tax Prioritization of Economic Sectors to Improve the Income Distribution in Iran's Economy Using Social Accounting Matrix

Inequality distribution of income causes many problems in economic, social and political fields in a society. Governments regulate the redistribution of income through fiscal policy, such as taxes, subsidies and grants. Since taxes have a more fundamental role than other economic measures in adjusting the distribution of income and wealth in a society, this study attempts to present a prioritization for the taxation in economic sectors in order to reduce income inequalities. Therefore, using the 2001 Social Accounting Matrix approach and IO-SAM and MATS software, the consequences of increase in tax rates were examined for each economic sector. Moreover, the total effects were divided into direct and indirect effects. The results indicate that increasing tax rates in sections like motor vehicles, air transport services, fuel, posts, telecommunications and support services increases the cost of living index less for low-income households, so they can pay more taxes in these sectors. On the other hand, due to the high consumption of low-income households of the electricity, kerosene, flour, animal and vegetable oils, meat, dairy products, road transportation services, and tea, the cost of living index would increase if the tax rate increases in such sectors. Therefore, it is better that these sectors pay fewer taxes than others.