Tax authorities continued to cast doubt on Friday on a sizable rise in budgetary revenues projected by the Armenian government for next year.
Armen Alaverdian, deputy head of the State Revenue Committee (SRC), warned that the agency will have trouble meeting the revenue target if economic growth in Armenia falls short of government projections.
Under the state budget for 2012 approved by parliament last week, the SRC is to collect 101 billion drams ($265 million) in extra taxes and social security payments. That is essential for the success of government plans to increase public spending by 5 percent to 1.04 trillion drams ($2.74 billion) and the same lower the budget deficit to a level equivalent to about 3 percent of GDP.
The Ministry of Finance based these figures on the assumption that the Armenian economy will grow by around 4 percent next year.
The head of the SRC, Gagik Khachatrian, has repeatedly described the tax revenue target as unrealistic. Prime Minister Sarkisian and Finance Minster Vache Gabrielian have dismissed Khachatrian’s objections. They say the SRC will be able to collect the extra revenues as a result of continued economic growth, improved tax administration and fresh amendments to Armenian tax legislation that were also passed by the parliament on December 8.
“The 101 billion drams [in extra revenues] is not something that can be achieved in five minutes,” Alaverdian told journalists. “There have been and there will be problems in 2012 with meeting that revenue target.”
“If we don’t have that growth [anticipated by the government,] it won’t be possible to collect that much revenue only through improved tax administration,” he warned.
Alaverdian also played down the tax amendments, saying that they could generate only up to 13 billion drams in additional tax revenues. “The tax package alone was never going to solve that issue,” he said.
Deputy Finance Minister Vartan Aramian agreed that the forecast growth rate will be critical for the implementation of the 2012 budget. “If our forecast of 4 percent growth is not fulfilled because of risks coming from the global economy, then naturally we will have to approach the budget realistically, rather than force our business entities to pay [more] taxes at any cost,” he told RFE/RL’s Armenian service (Azatutyun.am).
Finance Minister Gabrielian admitted last month that renewed recession in Europe and its spillover effects on Russia could slow Armenian growth and thus complicate the planned increase in tax receipts.