The Iranian Parliament on Sunday approved a budget for the financial year beginning March 22, but only after cutting government spending and revenue targets.
It cut spending by 5.5%, to $41 billion from $43 billion, and the revenue estimate by a similar percentage to $38.7 billion.
Prime Minister Hussein Moussavi told Parliament, known as the Majlis, that revenues from oil sales should be spent on production equipment, economic growth and the four-year-old war with Iraq.
But in a debate broadcast over Tehran radio, lawmakers argued that the government had overestimated oil revenue for the last two years and should increase taxation to compensate.
The parliamentary Budget Committee has proposed reducing the government's oil revenue estimate by 11.3% to $17.6 billion.