An Evaluation of the Impact of Economic and Tax Policies on Iran's Tax System Performance in 2025 (System Dynamics Approach)

The main purpose of this paper is, to design a dynamic model for evaluation of economic and tax policies on Iranian tax system by using system dynamics approach. For this purpose, we consider the tax effort, tax capacity and tax evasion subsystems. The simulation of this model has been accomplished during 2008-2025. The results of base model simulation show that, if current situation continues, situation of tax effort and tax evasion will not in good position and in 2025, only 66 percent of expected tax will be collected. Also the extent of tax evasion in years of the final simulation will be 35 percent. For study of necessary conditions in order to access to optimal status, different scenarios have been designed and simulated. The results of simulations show that, in order to access to the desired status, in addition to coordination and interaction among the variables, some attempts should be done simultaneously to reduce the inflation rate, increase welfare, and decrease the activities in underground economy, increase population growth, per capita revenue and taxes (taxes on consumption and import).