By Shakeh Avoyan
Armenia’s tax inspectorate claimed on Friday to have significantly improved the collection of workers’ mandatory social security contributions that are used for paying pensions and were enforced by another government agency until this year.
“We have worked for only seven days this year but have already made the difference,” Artashes Baybutian, a senior official from the State Taxation Service, told RFE/RL. “We have already collected almost half of what was collected in January 2004.”
“The process is improving day by day,” he said.
The exclusive authority to enforce the social tax was transferred late last year to the Taxation Service from the State Social Insurance Fund which was increasingly struggling to pay the growing but still modest retirement benefits on time. Government officials said the tax authorities are better equipped to ensure further pension increases expected in 2005.
The Pension Fund, which is now responsible only for pension distribution, was criticized by President Robert Kocharian late last month for failing to tackle widespread hidden employment and the underreporting of workers’ wages. The longtime head of the fund, Frunze Musheghian, tendered his resignation on Thursday. A senior member of Prime Minister Andranik Markarian’s Republican Party was promptly appointed in his place.
The average pension in Armenia has grown by nearly 40 percent to 8,800 drams ($17.5) over the last two years. The Pension Fund was finding it increasingly hard to ensure corresponding increases in social taxes, running up pension arrears in the course of 2004. The pensioners have still not been paid for December.
Speaking to RFE/RL earlier on Friday, Labor and Social Affairs Minister Aghvan Vartanian said that they will receive the money by the end of this month. “The current delays do not violate the law,” he said.
Baybutian was also confident that there will be no arrears this year. He admitted that scaling back tax evasion will be key to financing the planned pension increases.
Vartanian had earlier estimated that as many as 300,000 workers in the Armenian private sector are falsely shown earning up to 20,000 drams ($40) a month, the legal threshold for taxable incomes, in financial reports filed by their employers. He said least 130,000 other people have jobs that are not registered with the tax authorities.