Friday, April 5 2019 14:56

ArmInfo. The American Chamber of Commerce in Armenia (AmCham) and the The Union of Manufacturers and Businessmen of Armenia (UMBA) welcome the decision of the RA government to temporarily postpone the introduction of the excise tax  on sugary carbonated beverages.

"In many countries, the government sets taxes without taking into  account public opinion. In Armenia, there is a unique government open  to dialogue," member of the Public Policy Committee of the Union of  European Soft Drinks Associations (UNESDA) Michael Bond Nilson said  on the sidelines of the public discussion n tax reforms organized by  AmCham and UMBA.

According to the expert, in principle, the producers of the field are  not against the payment of this tax, but in order for the  introduction of tax in any sphere to be less painful and as efficient  and reasonable as possible, it is necessary to determine the  principles of taxation. In this case, according to Bond Nilson, it is  necessary to be guided by the principle of adequacy, that is, the  size and method of taxation should ensure the expected result. In  addition, the tax must ensure neutrality, that is, be fair for the  whole society. "If direct taxes, such as income, are paid by all  members of society, regardless of social status, then indirect taxes,  including excise taxes, can hit citizens with lower income levels  more strongly," he said.

In order to introduce a "correct" and "working" tax, Bond Nilson  calls for an analysis of world experience, achievements and gaps of  countries that have already introduced a tax on soft drinks. For  example, in the UK, where the excise tax was introduced in April 2018  with a claim for an additional 520 million pound sterling income for  the state treasury, a year later it was concluded that the expected  monthly income was 22 million pound sterling instead of the planned  43 million. After a similar tax was introduced in Denmark more than a  third of the country's population began to buy drinks in neighboring  Germany.

In addition, according to the expert, the justification of the  authorities of these countries that the introduction of the tax  pursues a "humanistic" goal has not yet been confirmed. According to  Bond Nilson, as practice shows, citizens of the country will soon  replace the excisable drink with a product with the same calorie  content. "There is no statistics indicating that the reduction in the  consumption of non-alcoholic beverages has led to an improvement in  the general health of citizens. That is, we are confidently reducing  tax revenues of the state treasury, but not the fact that we are  solving a health problem," he said

In this regard, as stated by a member of the Public Policy Committee  of the UNESDA, representatives of the sector believe that perhaps the  best solution to the issue would be to establish an equal approach to  all market players. That is, it is proposed to introduce a tax not  only on carbonated beverages, but also on all sugar-containing ones  and in the form of an increase in VAT (now, for representatives of  the sphere, the VAT rate is about 10%).

Earlier, ArmInfo reported that the Armenian government at this stage  refused to impose an excise tax on sweet carbonated drinks. Thus, the  Armenian budget will receive less taxes in the amount of about 3  billion drams. Meanwhile, the Ministry of Finance of Armenia, in  order to compensate tax losses of the budget as a result of lowering  the income tax and turnover tax, and their total negative effect on  the budget is estimated at 39 billion drams, among other changes,  previously proposed to expand the list of excisable goods to include  beverages with a sugar content of 5 grams or more per 100 grams of  product at a rate of 10% of the price, but not less than 30 drams per  liter.  The initiative referred only to carbonated drinks, except for  mineral water, and met with a harsh rebuff of the beverage producers  who came out to protest. The protesters argued that the decision  would inevitably lead to a rise in prices for carbonated drinks in  the amount of 20-30%, a reduction in demand for goods and a reduction  in jobs in this area.