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Mohammad Moghimi

Ensuring economic, social, and cultural rights requires the freedom of citizens in business and economic affairs, and the government must provide a framework that allows citizens to naturally fulfill their economic needs through interaction and competition with each other, while refraining from interfering in these matters. However, natural relationships between humans have shortcomings that are unable to create order and ensure social justice, and require a public force that, while considering the common good and interests, works towards creating economic order and justice in society.

Adam Smith, a famous British economist, was the founder of the classical school of economics. He believed that the world naturally progresses and does not require government intervention or specific measures for its transformation and evolution. Smith’s focus was on freedom, including the complete freedom of individuals and institutions to conduct business at a national level, as well as freedom of international trade. This provides a platform for free exchange between producers and consumers, without any restrictions on production or transactions.

On the other hand, socialists reject these principles, foundations, and natural order. They believe that all social problems stem from the capitalist system and that in order to eliminate social injustices, all means of production must be owned by the government and it must directly intervene and oversee economic affairs. They underestimate the power of personal initiative and the importance and role of individual effort. (1).

The liberal perspective is based on the first generation of human rights and requires a negative role for the government, while the socialist perspective is based on the second generation and requires a positive role for the government. After World War II, both perspectives were moderated and a middle ground was chosen. However, with the globalization of the free market economy and the resulting changes, it can be said that the freedom of citizens from government intervention in economic affairs has become a principle, and government intervention for the purpose of creating social order and justice is an exception to this principle. In this regard, Article 12 of the third principle of the Constitution states: “Proper and fair economic planning based on Islamic principles for the purpose of promoting welfare, eliminating poverty, and addressing all forms of deprivation in the areas of nutrition, housing, employment, health, and expanding insurance.”

Right to food and clothing.

After oxygen, water, food, and clothing are the first tools and necessities that human life depends on. Therefore, it is obvious that without access to the right to water, food, and suitable clothing, the right to life and human dignity is faced with serious challenges and risks, and humans are deprived of other rights as well. In the law of targeting subsidies, these rights are not explicitly mentioned, but the right to access social assistance – which includes providing cash and non-cash subsidies to households and providing support and rehabilitation services, including nutrition for pregnant women and children under 6 years old, and expanding microfinance services (2) for target groups – is mentioned in this law, which also includes food and clothing. However, in practice, apart from equal cash subsidies, other forms of social assistance such as non-cash subsidies and the implementation of a comprehensive social security system have been neglected and according to the report of the National Audit Office, violations have occurred in the implementation of these measures.

Payment of cash and non-cash subsidies to households.

A solidarity policy designed by the government leads to the determination of a “minimum wage”, which is a form of assistance provided as subsidies to meet the basic needs of the needy. As stated in the general interpretations of the Economic, Social and Cultural Committee, the government is not obligated to provide subsidies to all citizens; rather, only those in need are eligible to receive them. As Christine Sen says: “The emphasis is not on giving food or money to people, but on creating a social and economic environment that improves development so that there is no need to rely on charity.”

The process of price liberalization in our country began with the implementation of the targeted subsidy law. One of the solutions proposed by the legislature to minimize the consequences of implementing this law (including considering the increase in prices compared to global prices and its impact on inflation, especially on the needy and vulnerable segments of society) is to provide cash and non-cash subsidies to households. Therefore, first we will review some laws related to liberalization in this law and then we will examine the method of providing cash and non-cash subsidies to households.

In this regard, the legislator has obligated the government to target the subsidies in Article 4 of the Targeted Subsidies Law towards essential goods (rice, oil, milk, and sugar) and some essential services (postal services, air travel services, and rail services) over a five-year period. In fact, by targeting the subsidies for these goods and services, firstly, the subsidies would not be distributed to all people and would result in the removal of subsidies for some individuals. Secondly, by preferring cash subsidies, government intervention in the market and price distortions would decrease, which are two solutions in line with freeing prices and distributing wealth fairly in society.

Furthermore, in article 5 of the mentioned law, the legislator has obligated the government to liberate the price of flour and bread – to the extent determined in the annual budget bill – and according to the clause of this article, in order to support the needs of the underprivileged, the government has set a minimum of fifty percent higher subsidy for rural areas, small towns (with a population of less than twenty thousand) and vulnerable groups.

Article 7 of the mentioned law requires the government to regulate the impact of price liberalization on households, stating: “The government is authorized to allocate up to fifty percent (5) of the net proceeds from the implementation of this law in the form of the following expenses:

A – The subsidy should be paid to the head of the household in the form of cash and non-cash payments, taking into account the household’s income compared to all households in the country.

Six points can be examined in this article as follows:

1- The legislator has deemed the government “authorized” to spend up to 50% of the funds generated from implementing this law. In fact, the government has the discretion (not obligation) to use this amount (not to exceed 50%) in addition to providing cash and non-cash subsidies for social security, as it sees fit, to pay for subsidies to households.

2- The purpose of implementing this law is to generate income from price liberalization. In fact, before this, a cost was allocated for providing general subsidies (non-targeted) to certain goods and services, which was determined to be allocated for social security and providing cash and non-cash subsidies with the liberalization of prices.

3- According to clause “H” of Article 1 of the executive regulations of the aforementioned article, cash subsidies are exempt from any direct payment of cash by the government, which is received by the subsidy recipient through bank accounts.

4- The “K” clause of the mentioned regulation also stipulates in the definition of non-cash subsidies: “Any direct government assistance to households in the form of goods or through methods such as paper or electronic vouchers and coupons, as well as concessional discounts on electricity, natural gas, and water prices.” Although the legislator has mandated the payment of subsidies in both cash and non-cash forms without preference for one over the other, in practice, cash subsidies have been more prevalent in government agendas.

5- In article 7, the legislator has considered all households in the country eligible to receive subsidies. Paying subsidies to all citizens, especially in an equal manner, goes against the concept of targeting and social justice and is not based on legal grounds. Since groups in need in society such as the poor, low-income groups, people with disabilities, patients, children and female-headed households, minorities, the elderly, etc. are eligible to receive subsidies in order to achieve social justice or in economic and production sectors to promote economic development, therefore, the payment of subsidies to all households in the country has been approved, free from expert opinions and under the influence of political considerations and populist policies, and also to prevent failure in categorizing different groups in society. It is expected that this article will be amended in the future and the grounds for real targeting of subsidies will be provided; meaning that low-income groups will receive the most benefits from the program, while contributing the least to its financing, and

6- However, the legislator has considered all households eligible for receiving subsidies based on their income and has come closer to targeting. In this regard, article 5 of the mentioned regulations states: “The Ministry of Welfare and Social Security (7) is obligated to classify target households based on their income using a database.” This article emphasizes the classification of target households, while the target community is not defined in this law. Therefore, it is necessary to define the target community in order to properly target subsidies in future reforms of this law.

This article also states: “Income groups eligible for cash and non-cash benefits under this regulation are determined annually based on the proposal of the Ministry of Welfare and Social Security and the approval of the General Assembly of the [Organization for Targeted Subsidies]. However, considering that the target population has not been defined and in practice, cash subsidies are equally distributed to all citizens and non-cash subsidies have been neglected. Therefore, it can be said that this provision has not been taken into consideration by the executive officials.”

Article 6 of this regulation also stipulates that: “The share of cash, non-cash and comprehensive social security system shall be approved by the General Assembly of the relevant organization upon the proposal of the organization.” Considering that according to Article 7 of the Targeted Subsidies Law, 50% of the funds obtained from price liberalization are allocated to cash and non-cash subsidies to households and the implementation of a comprehensive social security system for the target community, this article is in the position of determining the share of each of these two provisions. However, the intended comprehensive social security system under this law has not been fully implemented and its share has not been fully paid. Therefore, this article has also not been properly implemented.

In this regard, Article 7 of the mentioned regulations states: “Cash and non-cash payments to all households in the country will be determined based on Article 5 of these regulations, using the table below.”

Directive 1- The subject of low-income households is determined as follows with the approval of the Ministry of Welfare and Social Security:

A – Vulnerable layers under the coverage of support institutions.

B – Residents of underprivileged areas of the country.

Other social classes have their own specific needs.

Article 2 – The organization is required to identify households with high incomes at least six months after the implementation of the law.

Directive 3 (Amendment 11/10/1389) – The amount of cash and non-cash payments to each recipient of subsidies, categorized by low-income, medium-income, and high-income households (after identification), will be approved by the general assembly of the organization upon the recommendation of the organization.

Despite this, in practice, we have not yet seen the targeted implementation of this law (considering the target population) in the distribution of cash and non-cash subsidies. In fact, despite the emphasis of this law on providing cash and non-cash subsidies to households based on their income, cash subsidies are paid equally to all applicants. Apart from the flaws and criticisms of the legislation in this regard, this shows a weakness in its execution and proper monitoring. However, it seems that political conflicts between the parliament and the government have also had no effect on it.

It should be noted that in the final months of the tenth government, a law entitled “Law on Provision of Basic Goods for Vulnerable Classes” was approved on 8/3/1392. This law states: “In order to preserve the food security of the beneficiaries under the coverage of the Imam Khomeini Relief Committee and the Welfare Organization of the country, the government is obligated to provide baskets of goods including rice, oil, and meat every three months and distribute them through the relevant agencies. The necessary funds for the implementation of this law will be provided from the share of high-income deciles from the targeted subsidy law and will be included in the annual budget of the country. The implementation of this law does not contradict the monthly payment of stipends to the families under the coverage of the Imam Khomeini Relief Committee and the Welfare Organization of the country.” This law has stipulated that its funds will be provided from the share of high-income deciles, while the method of identifying

With the start of the eleventh government and the statements of some officials regarding the targeted subsidy law, which emphasized the need to reform this law and the unfairness of the current law in terms of allocating subsidies to needy and deserving groups, it was expected that this government would take a comprehensive and principled approach to reforming this law. However, with the approval of the executive regulations of Article 21 of the 1393 budget law, the implementation of the second phase of this law began. But considering the widespread flaws in this law, it is not possible to properly implement the second phase of it with the approval of just one executive regulation. For example, in this law, all eligible applicants are recognized as recipients of cash subsidies. However, in paragraph 1, section “a” of Article 3 of the mentioned regulations, only needy households are recognized as eligible for receiving cash subsidies and the government has the authority to remove individuals who do not meet the criteria. Therefore, this section of

Therefore, it is proposed that in the first step, the legislator defines and determines the target community by amending this law, and by providing subsidies to members of this group, provides a real targeted framework. Additionally, the legal share of economic and production sectors should be paid and increased by amending the law, and subsidies in this sector should also be targeted towards infrastructure, such as modernizing and reducing consumption of old technologies, in line with the expansion of non-oil exports. Other issues, such as social security provisions in this law and its implementing regulations, which have legal flaws, should also be amended for better implementation of this law. Attention should also be paid to cultural rights, especially providing subsidies for research and primary education projects. All scattered laws and regulations related to subsidies should be formulated in line with the targeting of this law, and human rights experts (economic, social, and cultural rights) should also be involved in amending these issues. On the other hand, proper and democratic

Notes:

1. Tabatabaei Motameni, Manouchehr, Public Freedoms and Human Rights, Tehran: University of Tehran, First Edition, 1370, p. 147.

2. Article 11 of the Executive Regulations of Article 7 of the Targeted Subsidies Law states: “That portion of the funds allocated under these regulations for the expansion and strengthening of the comprehensive social security system shall be allocated by the organization for the implementation of the following items: … c- Support and Empowerment … 4- Nutrition for pregnant women and children under (6) years old 5- Expansion plan for microfinance services for target groups through the Imam Reza (AS) Charity Fund or banks…”

3. “Human Rights and Freedoms in Iran, translated by Yousuf Moulai and Rashid Barnak, Tehran: Publication of the Faculty of Law and Political Science, University of Tehran, first edition, 2003, p. 276.”

4. “Christensen, Cheryl, The Right to Food: How to Ensure It, New York: Institute for World Order, 1987, p. 33.”

5. According to Article 14 of the mentioned law, the transfer of credits subject to this law in Articles 7, 8, and 11 is allowed up to a maximum of ten percent in the annual budget, so that the total funds obtained from the predicted items in this law are consumed. As in the 1390 budget, the government was authorized to add the share of Article 11 of this law to Article 7. Article 11 also states: “The government is authorized to use up to twenty percent of the net funds obtained from the implementation of this law to compensate for its effects on expense credits and acquisition of capital assets.”

6. For more understanding of the concept of purposefulness, see: Bang, page 26 of this book.

7. Currently, the Ministry of Cooperatives, Labor, and Social Welfare…

8. Same.