Finance Minister Vartan Aramian on Thursday dismissed opposition calls for the Armenian government to reverse recent increases in personal income and fuel taxes.
The Tsarukian Bloc and the Yelk alliance are particularly critical of higher excise duties on fuel that came into force on January 1. The two opposition groups represented in the Armenian parliament blame them for recent weeks’ sizable rises in fuel prices. The National Assembly is due to debate next week a Yelk bill that would repeal the new tax rates.
Echoing statements by Prime Minister Karen Karapetian, Aramian insisted that their impact on consumer price inflation will be minimal. “When discussing [the recent amendments to] the Tax Code, we definitely took into account the impact of higher excise tax rates on [overall] prices,” he told reporters. “It’s estimated at just 0.5 percentage points.”
Aramian also made the point that tax cuts are a wrong way to reduce the cost of living in any country. “Tax legislation or taxes are not the right tool for helping socially vulnerable categories of the population,” he said. “This is not done through tax rates around the world.”
The minister further argued that the government needs more tax revenue to finance greater budgetary spending planned by it. The government would be wrong to resort to internal or external borrowing for that purpose, he said.
Yelk leaders say the authorities should boost their tax revenue by cracking down on tax evasion and corruption instead. They also claim that the higher income tax rates will hurt the middle class hard.
Government officials counter that only those Armenians who earn well above the average wage in the country will be taxed more. They say 90 percent of workers will not have any additional sums deducted from their wages.