Iran puts VAT 'on hold'

PUSHED BACK: Iran has postponed the introduction of VAT by two months. (Getty Images)

Iranian President Mahmoud Ahmadinejad postponed for two months on Thursday implementation of a value added tax (VAT) that has sparked nationwide strikes, the official news agency IRNA reported.

"In a bid to implement correct tax law and remove the obstacles and problems facing the correct execution of the law, the plan will be on hold for the next two months," he wrote in a letter to Economy Minister Shamseddin Hosseini.

IRNA added that the president had asked Hosseini to hold consultations with the representatives of different guilds and to "compile some proper measures in this respect and present them to the president".

Shopkeepers in Iran's traditional bazaars had been staging strikes in the past few days to protest against the introduction of the three percent tax, which became effective on Sept. 22.

On Wednesday, stalls were shuttered in the capital's main bazaar amid press reports of shutdowns in the big provincial cities of Isfahan, Mashhad and Tabriz.

Rises in retail prices have accelerated since Ahmadinejad took office in 2005.

In September, the cost of a basket of 45 staple food items was up 50 percent on a year earlier, press reports said.

Annual inflation topped 29 percent in the Iranian calendar month that ended on Sept. 21.

Iran's bazaars play an important political as well as economic role. Bazaar merchants contributed to the collapse of the regime of Mohammad Reza Pahlavi during the 1979 Islamic revolution, when they went on long strikes.

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