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By Atom Markarian
Tax collection got off to a strong start in Armenia this year with the government’s tax revenue target for January exceeded by almost 17 percent, officials said on Tuesday.

The head of the State Taxation Service, Felix Tsolakian, said his agency was supposed to collect 7.7 billion drams ($13.6 million) last month but actually raised more than 9 billion drams.

“We pulled ahead already in January and laid the groundwork for [improved tax collection in] the next months,” Tsolakian told reporters. “It is very important for us to keep up this tempo until the end of the year.”

Under the government’s budget for 2004, Tsolakian’s agency and the Armenian customs are to bring at least 256 billion drams to the state coffers, or 16 percent more than last year. The extra revenues will be critical for the authorities’ pledge to boost their modest expenditures on social programs, education and health care. They at the same time hope to lower the budget deficit to just 2.5 percent of Armenia’s forecast Gross Domestic Product.

January data on the collection of import duties, the second most important source of budgetary funds, have not yet been released. Like the Taxation Service, the State Customs Committee also met its 2003 revenue target.

Tsolakian said the tax authorities will seek to improve their performance with a “more consistent” fight against the huge informal sector of the Armenian economy. He blamed widespread tax evasion for his agency’s poor collection of the flat corporate income tax of 20 percent.

Legally operating businesses in Armenia routinely underreport their revenues and post bogus losses in their financial statements to evade the profit tax. The government moved to tackle the problem in December by having the parliament introduce a new turnover tax to be levied from all ostensibly loss-making firms.

Many in the Armenian business community protested against the extraordinary measure, saying that it will unjustly penalize law-abiding companies. Also, small and medium-sized businesses continued to report harassment by various-level tax officials keen to comply with their performance targets at any cost.
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