The Effect of Value Added Tax on Municipalities Sustainable Revenues

Value Added Tax (VAT), a kind of tax on goods and services (consumption tax), due to its broad tax basis and its high income-earning potential, is the commonest type of tax the government and the municipalities receive to finance their expenses. One of the challenges the urban managers encounter is the unsustainability of the revenue resources. In order for municipalities to increase their revenue, it is necessary that they increase the efficiency of the current income-earning methods or seek new revenue resources. Hence, passing the VAT law by the Islamic Parliament has directed the municipalities towards sustainable revenue and as a result, the municipalities revenue resources get directed to a sustainable one following many years of unsustainability. In case such revenue is completely actualized, it may become the major share of the revenue the municipalities receive. The current article takes a practical approach and makes efforts to assess the effect of VAT on the improvement of the municipalities sustainable resources utilizing the current theoretical principles. The research method lends itself to descriptive- analytical one as it endeavors to provide data in relation to the research purposes. Subsequent to data analysis, suggestions will be made on the sustainability of the municipalities revenue through VAT.