Journal of Urban Economics and Management

Implementation of targeted subsidies law has influenced the revenue and costs of these organizations directly or indirectly. In this regard, studying the impacts of mentioned plan on revenue resources and municipalities’ costs of the country is of great importance with systematic approach in municipalities’ budgeting. The impacts of adjustment policies of energy prices on municipalities’ revenue and costs can be evaluated systematically based on input-output models. What complicates the issue is the adjustment of municipalities’ costs issues.

Rise in the price of energy carriers may directly lead to increase in revenue from value added tax act for municipalities through increasing revenues from duties related to fuel and electricity. In order to estimate the impact of the implementation of the first stage of law on the income item, Consumption and price of energy carriers were used in the years before and after of the law. Having information about price and consumption after targeting, this makes it possible to calculate the increase of Rial value of use of different energy carriers in the year and calculate the rate of increase in duties of each fuel for all municipalities and rural municipalities in the country by using obtained figure and applying toll collection rates related to municipalities, specified in VAT act, as well. The impact of adjustment of energy prices on the inflation of different products can be stimulated by using price model based on input-output table. Increase in the costs of municipalities can be calculated according to obtained inflation in goods and services of the total economy. This type of stimulation will be based on systematic approach and all direct and indirect effects are considered in it. Budgeting of municipalities based on mentioned approach will result in balanced budget.