The Armenian government has reported a more than 7 percent increase in its tax revenue in the first half of this year, which could facilitate additional spending on capital projects promised by it.
The State Revenue Committee (SRC) collected almost 550 billion drams ($1.15 billion) in various taxes and duties in this period, up by 37.6 billion drams year on year.
Fiscal data released by the SRC shows that three leading Armenian mining companies as well as one of the country’s richest men linked to the government generated most of this gain.
The businesses controlled by the tycoon, Samvel Aleksanian, nearly doubled their tax payments in January-June. Most of them are engaged in lucrative imports of sugar, other basic foodstuffs and some medicines to Armenia. Aleksanian has long enjoyed a de facto monopoly on those imports.
Critics have long accused him of using his government connections to ward off competition and evade taxes. The tycoon has denied that.
The SRC figures show an even sharper rise in taxes collected from the three mining enterprises mainly manufacturing copper, molybdenum and gold. According to the National Statistical Service (NSS), Armenia’s first-half exports of copper, molybdenum and other base metals and their ore concentrates rose by only 30 percent year on year.
Vahagn Khachatrian, an economist and senior member of the opposition Armenian National Congress, suggested that this disparity results from tax payments which these and other Armenian firms are forced to make to the SRC in advance. He criticized the SRC practice, saying that it stifles economic activity in the country.
“This is a key instrument used by tax authorities,” Khachatrian told RFE/RL’s Armenian service (Azatutyun.am). He said the first-half increase in tax revenue does not indicate improved tax administration.
The SRC declined to immediately comment on these claims.
The current SRC chief, Vartan Harutiunian, is a figure close to Prime Minister Karen Karapetian. Harutiunian has repeatedly pledged to crack down on widespread tax evasion and corruption among tax officials since he was appointed to run the tax collection agency last fall.
The government’s tax revenue was up by over 10 percent in the first quarter of 2017. This led Karapetian to state in April that the SRC can collect around 50 billion drams ($105 million) more than expected in the course of the year. The government is therefore planning a corresponding increase in its 2017 spending on capital projects, he said.
The planned extra spending would be equivalent to about 4 percent of overall expenditures envisaged by Armenia’s state budget. The government had decided to cut public spending this year to curb a widening budget deficit. Its 2017 budget also calls for higher tax revenue.