By Shakeh Avoyan
The Armenian government has committed itself to ensuring a further, almost 17 percent increase in its tax revenues next year which will translate into considerably higher salaries in the public sector, a senior official said on Thursday. The government is to collect 257 billion drams ($470 million) in taxes and customs duties this year in accordance with its annual budget approved by parliament last December. This would be 16 percent more than it collected in the course of 2003.
According to Deputy Finance Minister Pavel Safarian, the tax revenues will hit 300 billion drams in 2005 under a three-year fiscal plan approved by the cabinet earlier in the day. He said the increase will allow the authorities to make good on their pledge to substantially raise the modest pensions and salaries of public sector employees in the coming years. Some categories of them such as teachers and doctors will get 50 percent pay hikes by the end of next year, he added.
Although the government’s tax revenues have steadily grown in gross terms since the mid-1990s, they still stood at less than 15 percent of Armenia’s Gross Domestic Product in 2003 -- a very low rate even by ex-Soviet standards. Economists attribute it to widespread tax evasion by businesses and government corruption. The problem means that the Armenian state budget, which will be worth $580 million this year, is too small to meet the country’s basic needs.
Under the government’s 12-year poverty reduction program launched last year the share of tax and customs revenues in the GDP is to grow by only 0.4 percent each year. Safarian said the government will try to ensure a faster increase of the ratio.