The Armenian government dismissed on Wednesday critics’ renewed skepticism about its ability to meet key budgetary targets this year, saying that that tax collection in the country is proceeding according to plan.
In a bid to dispel those doubts, the Ministry of Finance reported a more than 7 percent increase in taxes, social security payments and other duties collected in the first seven months of this year. It portrayed this and other fiscal data as a clear indication that “the budget is being executed in a smooth manner.”
The government’s 2012 budget calls for a total tax revenue of 874.4 billion drams ($2.1 billion), up by 101 billion drams from the 2011 level. This is essential for the success of government plans to increase expenditures by 4 percent and at the same time cut the budget deficit to a level equivalent to 3.1 percent of GDP.
Data from the Ministry of Finance shows that Armenia’s State Revenue Committee (SRC) collected about one-third of the extra taxes and duties in January-July.
“Tax revenues have been collected as planned until now and the talk of any [budgetary] deviation or underperformance does not correspond to reality,” the ministry said in a statement issued in response to gloomy reports on the matter by newspapers critical of the government.
Deputy Finance Minister Vartan Aramian gave similar assurances last week. He argued in particular that only about 40 percent of Armenia’s GDP is traditionally generated in the first half of a year.
“The collection of extra revenues is not on track,” insisted Armenak Chatinian, an economics commentator for the “Orakarg” daily. He said the SRC collected only 20 billion drams in additional taxes and duties in the first half.
Speaking to RFE/RL’s Armenian service (Azatutyun.am), Chatinian claimed that the government will seek to meet its 2012 budgetary targets “at any cost” because of a presidential election due in February. That means, he said, that the SRC will unleash “tax terror” against small and medium enterprises and even extort additional payments from large business.
The SRC chief, Gagik Khachatrian, publicly questioned the 2012 revenue target late last year. Prime Minister Sarkisian and Finance Minster Vache Gabrielian dismissed Khachatrian’s objections, saying that the SRC can generate more budgetary revenues by improving tax administration.