Thursday, April 26 2018 20:28

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.