The Armenian government’s tax revenue increased marginally in the first quarter of this year, raising questions about a nearly 10 percent rise in public spending and faster economic growth projected by the 2014 state budget.
Data from the Finance Ministry shows that the recently restructured State Revenue Committee collected 224 billion drams ($540 million) in various taxes and duties in January-March, up by only 1.7 percent from the year-earlier period.
The ministry figures show significant falls in proceeds from value-added and excise taxes as well as customs duties collected from imported goods, a key source of state revenue. This is explained, in part, by the fact that Armenia’s first-quarter imports were essentially flat, according to the National Statistical Service (NSS).
Government revenue from corporate profit tax, worth 21.4 billion drams, likewise fell by almost 10 percent year on year for reasons that are not yet clear. This and other decreases were offset by rises in income taxes paid by employers as well as other, less significant duties levied from businesses.
The 2014 budget drawn up by former Prime Minister Tigran Sarkisian’s cabinet envisages that the government’s total revenue will rise by around 10 percent to 1.13 trillion drams. It calls for a corresponding surge in expenditure needed for financing, among other things, salary increases promised to public sector employees. The budget also commits the government to keeping the public deficit at below 3 percent of GDP.
According to the Finance Ministry, despite the modest aggregate increase, tax collection in the three-month period went according to plan. Still, the government of the recently appointed Prime Minister Hovik Abrahamian signaled this week concerns about its ability to its meet its full-year revenue target.
Abrahamian met with Armenia’s leading businesspeople on Wednesday and stated the following day that they have until July 1 to stop evading taxes or face a crackdown by the tax and customs services subordinate to Finance Minister Gagik Khachatrian.