ArmInfo. The Armenian government is discussing ways to reduce the income tax and increase wages and pensions, said on April 26 during a briefing for journalists. Minister of Finance of Armenia Vardan Aramyan.
According to the acting Minister, the Ministry of Finance has repeatedly stated that any step in the social character, including raising the minimum wage or pensions should be correlated with budget revenues, that is, financed from the state's own resources. "It is extremely dangerous in the absence of such an opportunity to take on this responsibility, and finance these steps by increasing the amount of public debt," he explained.
As Aramyan pointed out, the Ministry of Finance worked on various models and came to the conclusion that the best way to reduce social tension and stimulate production growth is to revise the rates of income tax. So, by reducing the deductions of income tax the entrepreneur will be able to raise the salaries of employees. As reported by Vardan Aramyan, the government will soon submit proposals on the reduction of the income tax rate, balancing it with the available tools so that there are no problems and cracks in the state budget. In addition, according to Aramyan, the government is also thinking about raising pensions. Perhaps, the issue will be discussed during the planning of the Medium-Term Expenditure Program of Armenia from 2019. Recall that on April 12 at a meeting of the government. Prime Minister of Armenia Karen Karapetyan instructed to consider proposals to reduce income tax rates and effective expansion of tax administration tools. As Karen Karapetyan reminded, in 2017 economic growth was registered at the rate of 7.5%, the planned level of tax collection was also exceeded. According to Karapetyan, preliminary estimates indicate that it is time to consider the possibility of reducing the tax burden for a more active economic environment. From the point of view of microeconomics, the reduction of income tax rates will lead to an increase in real disposable incomes of the population and will serve as an incentive for hiring qualified employees from the side of business.
In parallel with the simplification of the tax burden, Karen Karapetyan believes, it is necessary to improve the tax administration tools in such a way as to significantly reduce the possibility of tax evasion by unscrupulous entrepreneurs. In addition, Armenian Prime Minister Serzh Sargsyan on April 20 reported on the government's plans to raise pensions and minimum wages, which have not been raised since 2015. Nevertheless, the Ministry of Finance has repeatedly stated that it is extremely dangerous to take such a step today, as raising pensions and minimum wages means increasing the country's debt burden.
Before the arrival of Prime Minister Karen Karapetyan, the Armenian expert community fought over the country's Tax Code for more than a year in order to substantially reduce the fiscal burden and give the economy an impetus for development. In the drafting of the NA, Aramyan himself also took part, not being a minister. Economists hoped that the new economic leadership of the country lobbied for the National Assembly these changes in the document, but the new government of Karapetyan ignored all this work. Through the parliament, the original version of the NA was "protaced", which, unfortunately, was supported by international financial organizations. Observers then did not doubt that the NA was given away purely political decisions.
