Tax collection in Armenia remains “appallingly” poor despite government efforts to combat widespread fiscal fraud, a senior official from the International Monetary Fund (IMF) said on Friday.
Guillermo Tolosa, the IMF’s resident representative in Armenia, said the authorities in Yerevan are still not doing enough to improve tax administration and the broader business environment. “Tax revenues as a share of the economy continued to be in 2010 as appallingly low as in 2009,” he told a news conference.
According to official statistics, the Armenian government’s total tax revenues rose by more than 13 percent to 591 billion drams ($1.58 billion) last year. They were equivalent to just over 17 percent of the country’s Gross Domestic Product (GDP).
“This ratio, this share is the lowest in … the former Communist countries, with the only exception of Tajikistan,” argued Tolosa. He said it shows that “positive steps” taken by the authorities are not enough to tackle the problem.
“Tax collections have not increased. So that has to mean that the shadow economy has not decreased,” he added.
Finance Minister Vache Gabrielian admitted earlier this year tax collection has yet to improve significantly. He downplayed the 2010 rise in tax revenues and said more needs to be done to reduce tax evasion.
Prime Minister Tigran Sarkisian regularly describes improved tax administration as a top government priority, having pushed through parliament numerous changes in Armenian tax legislation. The most recent legal amendments approved by the National Assembly in December envisage a major simplification of the country’s cumbersome taxation requirements and procedures.
Both the World Bank and the International Monetary Fund consider radical tax reform as well as an improvement of the investment climate essential for Armenia’s sustainable economic development. Tolosa reaffirmed this view on Friday.