Positive 1401 budget decisions in favor of the stock market

According to Tejarat News, a look at next year’s budget figures shows that the government has taken a special look at the exit of the stock market from the crisis in several lines and notes from the 1401 budget. One of these is the allocation of separate credit to the Market Stabilization Fund. In this regard, the government wants to spend 10,000 billion tomans of stock transfer tax, which is equivalent to 37% of the total government revenue from wealth tax, to help the market stabilization fund.

The second is to reduce the issuance of government bonds. According to statistics, in 1399, the government sold about 243 thousand billion tomans of securities in the capital market. Of course, the approved budget was 175,000 billion tomans, to which 125,000 billion tomans of bonds would be added with the approval of the heads of forces. In total, the government had predicted to sell about 300,000 billion tomans of bonds in 1999, of which 81% could be sold. Also in the same year 1399, the government has earned 35,000 billion tomans from the sale of shares or privatization through the transfer of funds on the stock exchange.

In the budget law of 1400, the government had a license to sell 132,500 billion tomans of securities, of which in the first six months of the year, about 126,000 billion tomans were sold and about 5,000 billion tomans remained. But in the 1401 budget bill, the government intends to earn 88,000 billion tomans from the transfer and sale of various financial and Islamic securities. This figure shows a 33% decrease compared to 1400. Of course, if the government takes 50,000 billion tomans of licenses to sell bonds from the heads of forces this year; The decline in bond sales next year will be about 51 percent.

But next year, the government has planned to repay 155,000 billion tomans to acquire financial assets, which is also in the interest of the capital market.

Another tax exemption for the 1401 budget is a five percent production tax exemption. In paragraph (f) of Note 6, it is stated that in line with production protection policies, the tax rate subject to Article 105 of the Law on Direct Taxes of Legal Entities Licensed to Use Relevant Ministries in Production Activities in 1400 is equal to 20%. This pardon is in addition to other exemptions, pardons and legal incentives of the mentioned persons. It should be noted that according to Article 105 of the Law on Direct Taxes, the total income of companies and income from for-profit activities of other legal entities is obtained from various sources in Iran or outside Iran. This law has a separate rate, subject to a tax rate of 25 percent. Economists say the 5 percent tax cut will boost corporate profits, as a 5 percent tax cut equivalent to large numbers would be significant for large listed companies. This tax exemption promotes market profitability and makes financial ratios more attractive to investors.

In the budget, some of these decisions have positive effects and some of these decisions have negative consequences. Decisions that have positive effects increase the absorption of liquidity and the positive index of the stock market, and negative effects lead to the outflow of liquidity from the stock market.

In fact, whenever government decisions lead to the enlargement of the capital market, increase the quality of shareholders and deepen the capital market, it can be said that the decisions are positive, and whenever they lead to the shrinking of the capital market and the outflow of liquidity, the decisions are naturally negative. In the budget of 1401, several important events took place, one of which is related to the removal of 4200 Tomans and the increase of the exchange rate.

Apart from agreeing or disagreeing with the elimination of 4200 currency and increasing the exchange rate to 23 thousand tomans, in such circumstances and by eliminating this type of currency, stock exchanges and market and capital activists will be ready to jump, because this will significantly increase the income of various industries such as Health, pharmaceuticals, inputs, food industry and so on.

In fact, in such a situation, the final goods are no longer priced in order, and domestic production does not have to compete with imported subsidized goods. Therefore, eliminating the 4,200 Toman currency can have a very positive effect on the stock market. On the other hand, the monopolization of the currency of general inflation that imposes on the economy makes products more expensive and this leads to greater profitability of scholarships; “This benefit is greater for people who have more inventory.”

The next case mentioned by the director of the Mahd Policy Institute is 10,000 billion tomans of government assistance to the capital market stabilization fund, which is said to be able to contribute a lot to the capital market. It should be noted that regarding the decisions taken to collect taxes in the capital market and then inject them into the stabilization fund, the opinion of capital market experts is that it is a great favor that the government, in the event that a deficit threatens the budget, Capital market grants. Experts believe that if this decision is implemented, it will undoubtedly help increase market liquidity and corporate profitability.

So, in summary, we can say: 1- Reduction of bond issuance, 2- Repayment of 155 thousand billion Tomans of government debts, 3- Government assistance of 10 thousand billion Tomans to the market stabilization fund, 4- Reduction of 5% corporate tax, 5- Imposition of tax on bank deposits of legal entities and 6- Increasing the exchange rate to 23,000 Tomans and eliminating the preferred currency. So far, the government has provided 6 assistance to the capital market.

Source: Farhikhtegan Newspaper