The Armenian government will primarily target large companies and wealthy citizens in its drive to improve tax collection next year, Prime Minister Tigran Sarkisian announced on Sunday.
“We have come up with a package [of legal amendments] whose goal is to collect more taxes from high earners,” Sarkisian said, referring to a bill finally approved by his cabinet last week.
The bill, which has still not been made public, reportedly contains a long list of draft amendments to Armenian laws regulating taxation. The government says they are essential for ensuring a more than 13 percent increase in tax revenues envisaged by its draft budget for next year.
Sarkisian said more than a dozen of the proposed changes would simplify taxation for small and medium-sized enterprises (SMEs). “That means our intent is to ease the tax burden on small and medium-sized business and shift that burden to sectors where there are high earnings,” he told journalists.
The premier has repeatedly identified big business in the past as a key source of widespread tax evasion in the country. Some of those companies enjoy a de facto monopoly on imports of basic goods and other lucrative activities.
Samvel Avagian, an independent economist, warned that they are in a position to respond to a heavier tax burden with price hikes. “The more taxes you collect from them, the more they charge consumers by exploiting their dominant positions,” he told RFE/RL’s Armenian service (Azatutyun.am).
Meanwhile, Deputy Finance Minister Vartan Aramian revealed that the government expects that most of the 101 billion drams ($268 million) in projected extra tax revenues next year will be generated by continued economic growth, rather than improved tax administration.
According to government projections, the Armenian economy will expand by 4.2 percent in 2012. It is on course to grow slightly faster this year.
The government’s 2012 revenue target has been openly questioned by Gagik Khachatrian, head of the State Revenue Committee. Speaking to RFE/RL’s Armenian service earlier this month, Khachatrian said the government has yet to “show those areas of economic development from where those additional revenues can be expected.”