Tuesday, January 16 2018 15:22
Naira Badalian

Expert: Subsidizing is the worst model of softening the results of price increase

Expert: Subsidizing is the worst model of softening the results of price increase

ArmInfo. An expert of the anti-corruption center "Transparency International", economist Artak Manukyan believes that subsidizing is the worst model for mitigating the consequences of rising prices. "Introducing the mechanism of subsidizing, the government subsidizes not the ordinary consumer, but the monopolist," he said at a meeting with journalists on January 16.

According to him, it is thanks to this mechanism that the authorities in addition finance the monopolists, including natural ones. This is done, in this case, at the expense of the people, as the funds are sent from the state treasury, whose revenues are formed due to taxpayers. According to the expert, if the government really wants to fight the price increase, then it should release natural monopolies from the value-added tax, since under the conditions of the Armenian reality, where there is essentially no production, the main financial burden of this type of tax is borne by the population. "The prices are rising, the volume of the expected VAT automatically increases - money is out of nowhere for tax collectors," he explained.

Meanwhile, economist Vahan Khachatryan thinks that today there is no way to soften the results of price increase for a number of things. Earlier, as the expert recalled, the Government of Armenia repeatedly resorted to the easiest of them - subsidizing the difference at the expense of the budget: the last time to neutralize the impact of increasing the tariff for water. "The Armenian government showed goodwill and decided to subsidize the rise in price from the state budget, despite the fact that there was definitely no reason to revise the tariff," Khachatryan said, adding that if he kept these funds in the country's budget, there might not be a reason to raise the prices for compressed gas, as a result of which the government expects to collect an additional 8 billion AMD.

Thus, the economist does not see sources for subsidizing price increases even for socially disadvantaged groups of the population. "The budget is already extremely strained: the state debt of the country, or, more precisely, the servicing of the state debt formed for today, is thus the number one challenge for the government of Armenia," he said.

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