The Effect of Natural Resource Abundance on the Government's Financial Policies in Iran During (1979-2009) with Emphasizing on the Natural Resource Curse Hypothesis

Oil export revenues constitute an important part of the annual budget in Iran. Since taxes are regarded as the major factor shaping the relationship among the government and citizens in a country so responsiveness of governments depends on their reliance on taxpayers. Natural resource abundance and windfall revenues probably weaken this relationship. Therefore، it was intended in the present paper to investigate the impact of effective factors on tax revenues from the perspective of «natural resource curse hypothesis». According to the current data، dependence of the government on tax revenues is decreased when oil revenues are increased; hence increased oil share in the government budget and fluctuations of oil revenues are one of the effective factors on the tax system. The purpose of the present paper was to investigate the effect of oil revenues on financial policies in Iran during the time period 1979-2009 in the framework of a linear model. The findings revealed that windfall revenues arising from oil resources decrease the need to taxation and lessen the efficiency of the tax system.