Prime Minister Nikol Pashinian demanded a more radical improvement of tax administration in Armenia on Friday as he presented the new head of the State Revenue Committee (SRC) to senior officials from the government agency.
Pashinian said reforms carried out by the previous SRC chief, Vartan Harutiunian, are “not sufficient.” The SRC must avoid “hampering economic entities” and the at the same time vigorously combat tax evasion and increase tax revenue, he said.
Pashinian also told Harutiunian’s successor, Davit Ananian, to “root out corruption” among tax and customs officers that has long been a major source of complaints by Armenian businesspeople.
“The success of our efforts to transform the positive energy accumulated as a result of recent political developments into concrete economic results greatly depends on the work of the SRC, the tax and customs bodies,” he declared.
“Mr. Prime Minister, I can assure you that we will accomplish the tasks which the country’s government will set for us,” said Ananian.
Ananian worked as a deputy minister of finance from October 2016 until his appointment as SRC chief. The 46-year-old was a tax inspector in the 1990s and ran a private tax and accounting consultancy from 2006-2016.
Harutiunian, who is close to former Prime Minister Karen Karapetian, resigned on Thursday. He pledged to embark on a major reform reforms after being named to run the SRC in October 2016.
The total amount of taxes and customs duties collected by the SRC rose by more than 7 percent last year, helping the government to cut the state budget deficit to 3.3 percent of GDP. The SRC reported an even faster rise in state revenue in the first quarter of this year.
At 1.16 trillion drams ($2.4 billion), the Armenian government’s 2017 tax revenue was equivalent to almost 21 percent of GDP. The proportion is still quite low by international standards, reflecting the scale of tax evasion in Armenia.
The tax-to-GDP ratio stood at less than 18 percent in 2012. It rose by 0.5 percentage points in 2017, according to the SRC.
Harutiunian, whom Pashinian publicly thanked for his work, defended his track record in a farewell statement to the SRC employees issued on Friday. “The great effort to improve the [tax collection] system and the implementation of effective projects have borne fruit: relations between business and the state structure have been moved on to a plane of dialogue and partnership,” he said.
The International Monetary Fund praised the Karapetian government’s “efforts to improve tax administration” already in June 2017. It said that they have “contributed to the higher-than-projected revenue collection.”