Although the Iran-backed Houthis collect tax revenues in their controlled-areas, which constitute most of the tax revenues in Yemen, they have refused for years to pay the salaries of state employees that have been cut off for 7 years, so that these revenues eventually go to financing the war and enriching their leaders.
In the areas under their control, the Houthis collect hundreds of billions of riyals annually and seize the funding provided by international organizations for their projects. Despite this, citizens are also deprived of health, education, water, roads, social protection and humanitarian aid, in addition to the constant increases in the prices of goods and services.
Stockholm Agreement
At a time when the legitimate government should have pressed to implement the Stockholm Agreement signed in December 2018, especially with regard to insisting that the Houthis deposit all revenues from the ports of Hodeidah, Salif and Ras Issa in the Central Bank of Yemen through its branch located in Hodeidah to contribute to the payment of salaries of civil servants, however, what happened was that the Houthis shirked their commitments and were rewarded by completing control over the ports of Hodeidah, increasing their revenues from them, and expanding the black market to sell oil derivatives.
The same thing is being repeated now, with talk of an imminent peace agreement that includes in its most important clauses the government paying the salaries of state employees in Houthi-controlled areas, including those appointed after September 2014, which is surprising, as how the Houthis seize all these financial revenues while the government takes care of pay their salaries.
The spending plan for the first half (January-June) of 2019 approved by the Houthi-run parliament in Sanaa indicates that total revenues amounted to YR260.475 billion, while those revenues in the second half of the same year (July-December) amounted to YR289.071 billion, which confirms the availability of sufficient resources to cover the salaries of the employees, and at the same time refutes the allegations of the Houthis that the revenues allow only half of the basic salary to be paid to the employee every few months.
The Vital Sources of Income
For the Houthis, tax revenues are considered one of the most important sources of income for them in covering their spending needs, most of which goes to the military and security side.
Tax revenues were one of the main sources of financing the state budget, so that before 2014 it was not among the priorities of the state’s income sources due to the presence of the source of revenue flowing from oil exports, which used to cover most of the state’s needs in terms of spending on salaries, wages, services, supplies, etc., which are under the control of the legitimate government, with the multiplicity of illegal export ports supporting the global black market for smuggled oil.
Looting of Tax Revenue
According to documents obtained by Yemen Details, the taxes collected by the Houthis last year amounted to YR686 billion, indicating that the total tax and Zakat revenues during the years 2015, 2016, 2017, 2018, 2019 and 2020 amounted to 537 billion, 528 billion, 413 billion, 475 billion, 469 billion and 582 billion, respectively.
The main vessel of tax revenues decreased during the war years 2015-2022 by about 57% of its value before the war in 2014 (689 billion), and it was assumed that tax resources would suffer the same decline during the same period, but the data obtained from the financial authority in Sanaa says the opposite.
The decline in direct and indirect taxes, with its two main components of customs duties and sales tax, is attributed to the outbreak of war as the most important reason.
Data analysis indicates that the Houthis were able to significantly improve their revenues, and the proceeds of tax resources in the Houthi-controlled areas in 2020 reached 582 billion and in 2022 to 686 billion , which exceeds the proceeds of 2015 when it was around 537 billion.
These revenues go to the benefit of the war effort and to the pockets of the Houthis, on which outrageous wealth have emerged, through the purchase and ownership of luxury real estate and cars.
According to economists, the proceeds of tax resources in the Houthi government from 2020 to 2022 are witnessing significant growth.
Economists concluded that the improvement in tax and revenue collection since 2019 makes it possible to resume the payment of employee salaries and pensions for retirees.
