Volume 31, Issue 4 (2017)                   GeoRes 2017, 31(4): 24-44 | Back to browse issues page
Article Type:
Original Research |

Print XML Persian Abstract PDF HTML


How to cite this article
Vossughi F, Mozaffari G, Papoli Yazdi M H, Hataminejad H. Proposal of Financing the Revenue System of Municipalities and Proposing a Framework (Case Study: Tehran Municipality). GeoRes 2017; 31 (4) :24-44
Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:

Rights and permissions
1- Department Of Urbanism, Azad University, Mashhad, Iran
2- Department of Geography ,Shakhes Pajouh Research Center, Isfahan, Iran ,
3- Department Of Geograpy ,Tarbiat Modares University, Tehran, Iran
4- Department of Geography, University of Tehran,Tehran, Iran
Abstract   (10527 Views)

Urban sustainable financing is one of the main challenges faced by politicians and urban planners.  Municipalities are concerned with decreased revenues and controlling their costs on one hand and due to the income limitation, the inability to finance many urban projects on the other hand. Developing countries, including Iran, which have inefficient economies, poor tax systems and lack of mechanisms for citizen participation in the provision of urban costs, municipal revenue system, is drawn mainly to the unstable and unhealthy resources. This problem showed itself mainly in Iran after implementation of the 1980 municipal self-sufficiency policy and especially took place in Tehran more seriously than other cities. The two major challenges of Tehran Municipality Revenue System consist of: Unstable and unhealthy municipal revenue system and failure of Tehran’s Municipality to achieve the financial and monetary markets to cover the costs of the construction of urban infrastructure and urban projects. Therefore, it is necessary to modify the structure. For this reason, this paper has proposed two models to solve these two challenges. Model No. 1 will bring stabilization of municipality’s income and revenue system in long term in form of two patterns as "Controlling, reducing and phasing out unsustainable and unhealthy sources of income" and "managing, improving and increasing the role of sustainable revenue sources". Model No. 2 also focuses on providing new ways in order for Tehran Municipality to gain access to the financial and monetary markets. Data was collected for the period of 2008 to 2014 including codes of Tehran Municipality revenues and the amount of revenue generated by each code. We also conducted structured and semi-structured interviews with 30 specializing experts in the research topic. The results showed that during the study period, 58% of Tehran Municipality’s earned income has been achieved from unstable and unhealthy sources and 20% from relatively stable resources. Only 22% of revenue is obtained from healthy and sustainable resources. So, Tehran Municipal Income System is quite unstable and unhealthy in the present situation. The most important approaches presented in model 1 are: Replacing the Renovation Duties, Value Added Tax, Unused Land and wasteland complications with income derived from fines and other unhealthy sources, using green taxes, very high increase in the building density fine rate, reducing the number of permits granted for density, the use of new rigs charges, create clearances database for building crime offenders, getting out the user fees for municipal services, getting the infrastructure networks ramifications fee, improving relations between governments and municipalities, enabling sub-codes which have low income or zero income, using a combination of taxes, considering the municipal tourism revenues and reforming the structure of municipality’s identifying and collecting taxes. Of the most important approaches presented in model 2, may also include the creation of the Metropolitan Development Fund, taking advantage of the potential of domestic banks, using foreign borrowing, direct-entry of Tehran Municipality to the OTC, and using the potential of financing companies. 


1. - ­ Abbasi, S. (2014), Financing through Collective Investment: Methods, Litter and Incentives, 6th conference on development financing system in Iran, P. 40, (in Persian).
2. ­ Afshari, M. (2013), The Main Features of Value Added Tax as a Reliable Source of Revenue for Municipalities, The city's economy, 14, pp.26-35, (in Persian).
3. ­ Akbari, N., Moazzen Jamshidi, H. (2014), Value Added Tax as a Sustainable income Source for urban management (Case Study: Isfahan Metropolis), 5th Conference in planning and urban management, Mashhad, Iran.
4. ­ Akbari, N., Yarmohammadian, N. (2013), Calculation of stability in Municipal Revenue in case of Building Duties Installment (Case Study: Isfahan Municipality), Journal of Urban Economics and Management, 1, pp. 103-115, (in Persian).
5. ­ Akhoundi, F. (2013), The Role of Municipalities Revenue Sustainability in the Actualization of Urban Development Goals, The city's economy, 16, pp. 70-73.
6. ­ Antón, A., Boyd, Roy, E., Alejandra , I., María E. (2016), Universal social insurance for Mexico: Modeling of a financing scheme, Economic Modelling, 52, pp.838–850.
7. ­ Babbie, E.R. (2011), The Basics of Social Research, Cengage Learning, Belmont.
8. ­ Basiri Parsa, N., Akbari, N. (2011), Municipal Revenue Stability and Sustainable Urban development: A Case Study of Hamedan, The first conference on sustainable urban development, Tehran, Iran, (in Persian).
9. ­ Bazargan, A., Hejazi Y., Eshaghi, F. (2008), The process of internal evaluation. Douran publications, Tehran, Iran, (in Persian).
10. ­ Bird, R. M. (2005), Getting it Right: Financing Urban Development in China, Working Paper for the International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
11. ­ Bonar, S. (2014), External Financing of Urban projects and the Efficiency of Municipal Services (Case study: Tehran), Ph.D. Thesis in Economic sciences, Payam Noor University, Tehran, Iran, (in Persian).
12. ­ Center for Tehran’s Urban Studies and Planning (2006), Draft of Urban Management Comprehensive Law, Tehran municipality, Tehran, Iran, (in Persian).
13. ­ Chetan, V., Hitesh, V. (2011), Creative Financing of Urban Infrastructure In India Through Market – based Financing and Public Private Partnership Options. University of Toronto, new Delhi National Institute of Public Finance and Policy new Delhi, No. 3-7.
14. ­ Danesh Jafari, D., Karimi, S. (2012), Contrastive Study of Income Resource and Financing of Tehran Municipality and Some Other Important Cities of the World, The city's economy, 11, pp. 24-38, (in Persian).
15. ­ Danesh Jafari, D., Babajani, J., Karimi, S. (2015), Assessment of Sustainability in Tehran Municipality's financial resources and income, Journal of Economics and Urban Management, 7, pp. 15-34, (in Persian).
16. ­ Ebel, R., Vaillancourt, F. (2004), Revenue sources of local governments: Nature and determinants, 131-144 in Freire, Mila and Belinda Yuen (eds), Enhancing urban management in East Asia, England: Ashgate, Publishing Limited.
17. ­ Faraji Mollaei, A., Azimi, A. (2012), Analysis of municipality’s sustainable income (A Case Study of Boein Zahra), The city's economy, 12, pp. 59-72, (In Persian).
18. ­ Financial and Administrative Assistance for Administration of Revenue Collection and Recognition (2008), Tehran Municipality's master plan for sustainable revenues and other financing sources, Approval of sixty-four, sixty-sixth and sixty-eighth regular meetings and formal-legal super Tehran's City Council. The third period, Tehran, Iran, (in Persian).
19. ­ Govinda, R. M., Bird, R.M. (2010), Urban Governance and Finance India, University of Toronto, new Delhi National Institute of Public Finance and Policy, new Delhi, No 7-9.
20. ­ Habibniya, A., Shahmorady, H. (2010), Common Investment Fund as a Tool for Help to Small Investors, International Conference on the development of the financial system in Iran, (in Persian).
21. ­ Hadi Zonooz, B. (2003), Tehran's strategic planning, study design reform Income of Tehran Municipality, Coordination and Planning Department of Tehran Municipality, Tehran, Iran, (in Persian).
22. ­ Hashemi, S. m, Basirat, M., Mazloumi, M. (2013), Strategies to Achieve the Metropolitan’s Desired Income System with Oriented to Realization of Sustainable Urban Development, 5th Conference on municipal finance, problems and solutions (with economic approach resistance), Tehran, Iran, (in Persian).
23. ­ Hassanzadeh, A., Khosroshahi, P. (2010), Effective Funding Model for Municipalities Metropolitan Area (Case Study of Tehran), Monetary Institute and the Central Bank, the Municipal Finance Conference, Tehran, Iran, (in Persian).
24. ­ Khmel, V., Zhao, S. (2015), Arrangem,ent of financing for highway infrastructure projects under the conditions of Public–Private Partnership, IATSS Research, Article In Press, Available at:
25. ­ Landeta, J. (2006), Current validity of the Delphi method in social sciences, Technological Forecasting and Social Change; 73 (5), pp.467-482.
26. ­ Liu, Z. (2005), Planning and Policy Coordination in China's Infrastructure Development, Background Paper Prepared for an East Asia and Pacific Infrastructure Flagship Study Commissioned by ADB-JBIC-World Bank, The World Bank, Washington D.C. Ministry of Land Resources of China.
27. ­ Mohanty. P. K et al (2007), Municipal Finance In India: An assessmen, Department of Economic Analysis and Policy Reserve Bank of India Mumbai, Development Research Group, No 26.
28. ­ Mousavi, M., Saeidabadi, R., Bagheri Kashkouli, A. (2010), Financial management solutions for municipalities using SWOT model (Case study: City of Taft), Journal of Geography and Environmental Studies, 5, pp.1-16. , (in Persian).
29. ­ Mousavi, S.M. (1391), Trends and financial structure of municipalities, 5th Conference on municipal finance, problems and solutions (with economic approach resistance), Tehran, Iran, (in Persian).
30. ­ Nadi Qomi, V. (2013), A Review of the Financing Methods for Municipalities to Look at New Financial Tools, 5th Conference on municipal finance, problems and solutions (with economic approach resistance), Tehran, Iran, (in Persian).
31. ­ Navarro, A. M., Llanto, G.M. (2014), Financing Infrastructure in the Philippines: Fiscal Landscape and Resources Mobilization, Discussion Paper Series, 01, Philippine Institute for Development Studies
32. ­ Powell, C. (2003), The Delphi technique: myths and realities. J Adv Nurs, 41 (4), pp.376-382.
33. ­ Sharzeei, G., Majed, V. (2012), Sustainable financing of the city, how to finance sustainable urban development, Urban Management, Spring and Summer Special Issue, pp. 299-316, (in Persian).
34. ­ Sharzeei, G. (2009), Recognition and Analysis of Countries Municipality income items Stability, Urban Management, 20, pp. 23-37, (in Persian).
35. ­ Tabatabaei Nejad, S. M., Tabatabaei Nejad S. A. (2012), Law Pathology of Financial Resources in Urban Development Projects, 4th Conference of Municipal Finance: Problems and Solutions, Tehran, Iran, (in Persian).
36. ­ Tavanbakhsh, M., Arjmand Siahpoush, E. (2010), Principles of Sustainable Urban Development, First Edition, Jameeshenasan Publications, Tehran, Iran, (in Persian).
37. ­ Tsui, Kai Yuen, (2011), China's infrastructure investment boom and local debt crisis, Eurasian Geogr Econ, 52 (5), pp.686–711.
38. ­ UN (2009), Guide to Municipal Finance, United Nations Human Settlements Program, 2009.
39. ­ Van Dick, Mine Peter. (2004). Financial Management City: Municipality Access to National and International Capital Markets in Order to Finance Urban Infrastructure, Translated by Mohammad Reza Moeini, urban management, 13,18-27.
40. ­ Venkatachalam, Pritha (2005), Innovative Approaches to Municipal Infrastructure Financing a case study on Tamil Nadu, India, Development Studies Institute, London School of Economics and Political Science, London.
41. ­ WECD (1987), Our common future, Oxford University press.
42. ­ Wong, Christine P-W. Bird, R. M (2006), China’s Fiscal System: A Work in Progress, University of Washington and University of Toronto.
43. ­ Wu, Weiping, (1999), Reforming China's institutional environment for urban infrastructure provision, Urban Stud, 26 (13), pp. 2263–2282.
44. ­ Yeganegi Dastjerdy, V. (2012), Take the Role of Urban Development Agencies in Municipality’s Financing, The city's economy, 12,pp. 47-58, (in Persian).
45. ­ Zanganeh Shahraki, S., Hosseini, A. (2014), City Economic Management with an Emphasis on Local Taxes and Variables Affecting it (Case Study: Tehran). Urban Economy and Management, 2, pp.87-107, (in Persian).
46. ­ Ziyari, K., Mahdi, A., Mahdian Bahnamiri, M. (2014), Study and understanding of financial resources and strategies for improving municipal revenue stability; Case Study: the city of Mahabad Municipality, Urban Management, 31, pp.107-124, (in Persian).