Challenges and Prospects for Revenue Collection in Iraq: An Analysis of Fiscal Powers between the Federal and Local Levels in the Post-2003 Era

Almost complete dependence on the federal budget allocations, which depend heavily on oil revenues, to finance current and investment domestic expenditures and the associated problems and challenges to development, In achieving its objectives, in particular the provision of services and infrastructure projects , and that of research aims it is Definition of the financial and economic situation at the federal and local levels in the Iraqi economy it’s work and problems, and demonstrating the importance of diversifying local revenue sources and its role in achieving economic stability and achieving sustainable development at the local level, has been based on the data collected at the federal and local levels, then we used pointers to measure fiscal decentralization that appeared almost complete dependence on oil revenues ,which amounted to (92%) of the total public revenues for the period (2006-2023) based on an official exchange rate between(1467 - 1182) Iraqi dinars per dollar during the above period. As for non-oil revenues, they constituted (8%) only. This is has led the exposure of the Iraqi economy to external shocks as a result of dependence on the oil sector and its implications for the federal budget, which is the main channel through which the effects of fluctuations in the crude oil market are transmitted. As for Revenues Governments local has formed (5%) of the total public revenues, that reflected on the low percentage of its contribution to financing local spending and strengthening the local budget, which brings us to a state of schizophrenia between federal and local revenues, which will deepen the financial gap and impede development In addition, local governments suffer from a lack of diversification of alternative revenue sources, so the Diversification of revenues at the federal and local levels in the Iraqi economy involves the effect of crowding out Whereas, increasing local revenues to 25% will be at the expense of federal government revenues. Finally To diversify revenue at the federal and local levels ought to Subject to swap based on Basis Efficiency and fairness considerations in revenue sharing.