* Subsidies seen as a huge burden on state finances

* Less gasoline usage will ease burden of more sanctions

* Government still to help poor, middle class could suffer

Iran’s plan to cut costly fuel and food subsidies brings to a head a debate over economic inefficiency that has raged for years but has become urgent because of the threat of more U.N. sanctions, analysts say.

The bill could save up to $20 billion in 2010/2011 by slashing subsidies for gasoline and other refined products, natural gas, electricity, water, food, health and education.

The subsidies cost Iran some $100 billion a year, or 30 percent of GDP, according to BEDigest, published by a France-based energy consultancy group.