ArmInfo. In 2021, the Armenian government intends to attract loans in the amount of about $ 700 million, however, a decrease in the level of collection of state revenues this year may negatively affect the promises of international financial institutions to provide these resources.
The government is seriously frightened by such prospects and easily acts against its own interests, in fact, curtailing all the most important programs for the liberalization of the social sector and restraining the development of small and medium-sized businesses. Over and over again, international donors to Armenia, with the tacit consent of a weak and frightened government, sacrifice the prospects for economic growth and the opportunities for improving the well-being of the country's citizens to a tight fiscal policy. And what were the promises: I n the state budget of the country in 2021, which has already entered into force, the volume of tax collections will be 9% less than in the past year. Even with a projected 3.2% GDP growth in Armenia, the government's fiscal and investment policies are likely to fail as negative expectations are high in both the private and public sectors. And the authorities are trying to increase the revenues of the state budget, again at the expense of society, mainly at the expense of the middle class and low-income citizens, by presenting a program of measures to reduce tax gaps.
In a conversation with ArmInfo's correspondent well-known Armenian economist Suren Parsyan noted that in the conditions of decreasing tax collection volumes, neither the International Monetary Fund, nor the World Bank, nor the European Bank for Reconstruction and Development will risk financing the problematic Armenia. In other words, as the economist pointed out, they will not lend to a person whose income is falling. "Now Armenia's incomes are falling, and these financial institutions, of course, will demand from Armenia to increase tax revenues. If you take a loan (the government plans to take loans worth about $ 700 million during 2021), you should increase your income, to ensure the return of financial resources, "Suren Parsyan said.
The government considers the introduction of VAT on healthcare and education services as one of the directions of replenishing the state treasury with additional revenues, thereby making these services less accessible to a significant segment of consumers. According to Suren Parsyan, these areas have been exempted from VAT for many years, as they were considered priority for the state. The economist noted that, for example, most of the cost of education falls on wages. "That is, for example, 80-90% of the university's budget falls on salaries. Now the tuition fee is on average 600 thousand drams, after the application of VAT it will exceed 700 thousand drams a year. The university itself will receive its 600 thousand drams, and the rest amount will be transferred to the state budget. Thus, in the end, students and their parents will suffer, and ultimately the society itself, the very idea of strengthening the educational potential of the country, "the economist stressed, adding that a similar situation will be in the healthcare sector.
According to him, medical services amount to about 500 billion drams a year, and if they are levied with VAT, then an additional conditional 80-100 billion drams may appear in the state budget. "They will try to collect these revenues in order to increase the creditworthiness of Armenia, otherwise they will not be given loans. This is the only goal of such changes," the economist added.
Another way to increase the level of collection of state revenues is to lower the turnover tax threshold. "At the moment, enterprises with a turnover of up to 115 million drams can operate in the turnover tax regime. Now the government wants to lower this threshold again. Let me remind you that the threshold was raised and lowered several times, but as a result of these experiments, it amounted to an optimal 115 million drams, with the goal of developing small and medium-sized businesses, conducting active economic activity. But now the government, in fact, is again trying to tighten tax policy, especially in relation to small and medium-sized businesses. This tax policy will deal more than a serious blow to this area of business, said the economist.
The third option is the possibility of offsetting value added tax on agricultural products. "This is based on serving the interests of supermarkets. When supermarkets, for example, buy 1 kg of potatoes from villagers for 200 AMD, then, taking into account the VAT increase by 20%, this amount increases to 240 AMD. Meanwhile, the yard shop, which operates in the field of turnover tax will increase the cost of the same product by only AMD 20 - up to AMD 220. Supermarket owners understand that prices for their vegetables and fruits are uncompetitive compared to stores in the`` around the corner '' format, demanding from the government privileges to maintain their prices at lower level - AMD 210-220. As a result of this policy, small shops, yard shops that sell vegetables and fruits, the prices of which are relatively lower than in supermarkets, will be severely affected. These large supermarkets want to expand their sales market, also at the expense of small shops, "Suren Parsyan emphasized.
According to the economist, the government's policy is, in fact, an extremely liberal model, and the Cabinet of Ministers has already demonstrated that it cannot implement it. "For example, from January 1, 2020, a policy of a flat (flat scale) income tax was introduced, as a result of which people with high wages pay the same income tax - 23% as people with low wages. In addition, the monopolist oligarchs who paid 20% of income tax, now pay 18%. As a result of these tax benefits, the state budget did not receive 30-40 billion drams, and the burden of replenishing this money fell on society. Excise taxes on alcohol and tobacco have increased. Now, in 2021, excise taxes on alcohol, cigarettes, gasoline and diesel will rise again. In fact, the tax burden that was previously imposed on the rich and very rich is now being transferred to the whole society, "Suren Parsyan said, adding that as a result of this fiscal model, society will become poorer.
"The best argument in favor of this is the official statistics. In 2019, the number of poor in the country increased by about 3% compared to the previous year. And I assure you that in 2021, as a result of this policy, the number of poor will increase again, and the uneven distribution of income will increase. . In other words, the polarization between rich and poor in our country will increase, "the economist stated.
