By Atom Markarian
The Armenian government said on Wednesday that it is on track to meet its tax collection target for this year, having already raised 33 billion drams ($56.5 million) in taxes from January through April.
This is about 14 percent more than the figure reported by it during the same period last year. The State Taxation Service (STS) is to raise a total of 117.4 billion drams in the course of the year. The government’s 2003 budget calls for 287 billion drams ($494 million) in aggregate revenues. More than a third of that is to come from import duties collected by the government’s Customs Department.
The head of the STS, Yervand Zakharian, said the increase was made possible by continuing robust economic growth and his agency’s crackdown on corporate tax evasion. He said the prolonged election period, which was expected to slow down economic activity in Armenia, has had no negative impact on the tax collection process.
“The work which the tax bodies had to do for implementing the budget has been carried out in full,” Zakharian told a news conference.
The STS collected a total of 106 billion drams in various taxes last year or 26 percent more than in 2001 -- its highest ever year-on-year increase in tax revenues. Value-added and excise taxes continue to account for their biggest share. They totaled 12.6 billion drams in the first four months of 2003. The government, by comparison, collected only 5.4 billion drams in corporate profit taxes.
Armenian businesses have long accuses the tax authorities of resorting to illegal methods of meeting their budgetary targets. Particularly frequent are reports of advance payments extorted from them by tax inspectors. Zakharian’s agency, for its part, claims that local companies routinely underreport their revenues to evade taxes.
Fear of government harassment is one of the factors that is driving a growing number of wealthy businesspeople to run for parliament and establish closer government connections. Many of them are seen as having good chances of winning parliament seats thanks to their substantial financial resources.
Zakharian made it clear that those who will get elected should not expect privileged treatment from the tax authorities. He swiped, in particular, at tobacco magnate Hrant Vartanian who has teamed up with the Armenian Revolutionary Federation (Dashnaktsutyun), an influential party supporting President Robert Kocharian, for the May 25 parliamentary elections.
Vartanian was recently sanctioned by the taxation service for distributing cigarettes free of charge to poor and elderly people without paying excise tax on them. The authorities found the practice, which Vartanian portrays as “benevolence,” illegal.
“If Mr. Vartanian wants to help people, he should buy those cigarettes with cash,” Zakharian said.
The criticism appeared to reflect growing friction between Dashnaktsutyun and Prime Minister Andranik Markarian’s Republican Party (HHK), the two biggest pro-presidential groups contesting the elections. Vartanian, who is close to Kocharian, was already publicly attacked on Saturday by Serzh Sarkisian, the powerful defense minister aligned with the Republicans.