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Reducing Tax Burden ‘Key’ To Economic Growth


Armenian Minister of Finance Atom Janjughazian

The Armenian government plans to reduce the burden of direct taxes as it considers it to be key to economic growth, according to a minister.

“But lower direct taxes at least in the short term and medium term imply risks that there will be less budget revenues,” Minister of Finance Atom Janjughazian told journalists on Thursday.

“As we also have a ceiling for our debt, we would have to refocus from taxing capital and revenues to taxing consumption,” he added.

At the same time, according to Janjughazian, the government has found it reasonable to refrain from changing the value added tax, which is the main source of revenues, since it contains risks from the point of view of the country’s competitiveness.

“There are not so many options left and in taxes on consumption it is excise taxes and taxes on certain types of activities where the tax burden can be revised. Somewhere the rise will be higher, somewhere it will be lower…It’s another question whether it is good or bad,” he said.

Workers of a number of currency exchange offices and pawnshops have been holding protests against a considerable rise in their license fees envisaged by the package of planned reforms.

Opponents have criticized the government of Prime Minister Nikol Pashinian for his economic policies in this regard, claiming that the changes will hit small and medium-sized enterprises.

The Armenian National Congress party of ex-president Levon Ter-Petrosian, which has supported the Pashinian government politically, joined the criticism on Wednesday by outlining possible risks that it said the planned reform of the tax legislation poses to small and medium-sized businesses. In its statement the extra-parliamentary party particularly pointed out risks of raising license fees for currency exchange offices and lending organizations.

Meanwhile, Minister Janjughazian said: “Any change may lead to the change in the behavior of the consumer, and hence it may affect a particular type of activity or an entity engaged in that type of activity. It is impossible to have regulation that will have an equal effect on all and all will be equally satisfied with it.”

As to whether the government may consider lowering the tax burden in connection with certain discontent in some sectors, Janjughazian said: “As discussions are not over yet, changes are possible in any direction.”

The minister said the draft amendments to the tax legislation may be sent to parliament as early as next week.

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