The Armenian Ministry of Finance thinks that the government should increase its budgetary expenditures by over 10 percent and ensure a corresponding rise in its tax revenues next year, it emerged on Friday.
A preliminary version of Armenia’s draft state budget for 2014 drawn up by the ministry and unveiled at a weekly cabinet meeting in Yerevan calls for 1.27 trillion drams ($3.1 billion) in expenditures, up from 1.15 trillion drams projected for this year. Budgetary revenues would similarly rise by 11 percent to almost 1.15 trillion drams. Ninety-six percent of them are supposed to come from taxes and other state duties.
Officials said that Prime Minister Tigran Sarkisian and the heads of various government agencies will start discussing these proposed budgetary targets on Tuesday. The government plans to approve the draft budget by the end of this month.
The State Revenue Committee (SRC) appears to consider the tax revenue target unrealistic. A deputy head of the SRC, Vakhtang Mirumian, spoke of “substantially different” revenue projections made by the tax collection agency during the cabinet session chaired by Sarkisian. Mirumian challenged the Ministry of Finance to substantiate its 2014 tax target.
Deputy Finance Minister Safarian, who presented the preliminary draft budget, declined to comment on the SRC objections. “Maybe they are more optimistic than we,” he told journalists. “They haven’t presented their figures. When they do, I will comment.”
The SRC similarly objected to higher revenue targets set by the government earlier but still managed to meet them. It reported a 21 percent surge in various taxes collected in the first half of this year. This performance put the government on track to keep the budget deficit at a level equivalent to 2.6 percent of Gross Domestic Product.
Despite having risen considerably in absolute terms in the past several years, Armenia’s tax revenue remains one of the lowest in the former Soviet Union as a share of GDP. The tax-to-GDP ratio stood at less than 18 percent last year, compared with 25 percent in neighboring Georgia.