The economist is convinced that the luxury tax will only be eyewash – they should raise the real estate tax on mansions, mining industry and banks.
There is little time left till 2012 and people continue expressing different ideas on 101 billion AMD more revenues for the budget of the upcoming year. Some specialists are convinced that they will collect additional revenues at the expense of the small and medium-sized enterprises. Some businessmen who talked with me are convinced that they themselves will pay this money.”
Owner of “Vedi Alco” company Manvel Ghazaryan and Ruben Hayrapetyan are convinced that they will collect 101 billion from the big enterprises. “We are to pay, who else?” they assure. Owner of “Max Concern” Khachik Manukyan thinks, “Well, it is obvious that much will be at the expense of small and medium-sized enterprises. The National Assembly discusses, afterwards it will be clear how that money will be collected, and perhaps more money will be collected.” According to K. Manukyan, the present enterprises must fill the budget one way or the other, “There won’t be many changes in Armenia between 2011 and 2012. No new enterprises will be suddenly opened to pay the taxes.”
Let me observe that recently after the Republican Party of Armenia (RPA) economic conference, Prime Minister Tigran Sargsyan stated that the new tax package prepared by the Cabinet aims at making SME (small and medium-sized enterprises) burden lighter and at transfering that burden to other areas where there are big revenues. The Cabinet members assure 101 billion will be collected thanks to this new package and the suggested economic growth.
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“I am surprised with what the Prime Minister says – it is obvious that more than 15 percent of revenues in Armenia are indirect taxes. Therefore, every tax raise will burden the ordinary people by 75 percent. Therefore, in this case, stating they will burden big enterprises just astonishes me. In a nutshell, that man thinks everyone is stupid”, said economist Hrant Bagratyan, a member of the Armenian National Congress (ANC), about the statement of the Cabinet. According to him, the Cabinet has no grounds to state that it is a very difficult thing for many to collect 101 billion and what heroic work they do to collect that money, “Even if they don’t do anything, they will get 85 percent of 101 billion only at the expense of increase in prices and in mining production. 101 is not much, they should increase the budget income by 400 billion levying taxes on mining production, increasing the burden of the income tax and strengthening the real estate tax. Those steps are not taken, besides a small luxury tax, which they imposed on a few cars, it is not much money. If they touched the shady business, the budget revenues would increase by 350 billion.”
In response to my observation that the big enterprises state they will be burdened with 101 billion, moreover, money will be collected with the help of tax changes, Mr. Bagratyan said, “They lie. Let’s not consider indirect taxes, because those are paid by the people. And having 56 percent of their business in taxes, the oligarchs pay only 31 percent of taxes. The luxury tax is imposed only on cars, for example, they will collect tax from a $90 thousand car, despite the fact that this man has a $10 million mansion. It is just ridiculous. A few dozens of cars at that price are imported in Armenia every year. Those are just peanuts, those are just eyewash. As if they say give us a few pennies so we can say that we collect luxury tax. Let them raise the real estate tax. Raise real estate tax from 300-500km² and it will guarantee 5 percent of the budget. They don’t do that. They don’t use the thesis of directly selling ore that will yield 300 billion. For example, let them pay 65 percent of molybdenum ore as a tax. Therefore, they only pretend.” The economist is convinced that the prices of elite buildings will fall, “A man is registered as the owner of 10 thousand km² building and if in the case of 500km², he was suddenly levied on a high real estate tax, those empty mansions and apartments would immediately disappear, the prices would fall and they would sell it to ordinary people. Pointless construction would disappear, businessmen would direct that capital to industry, and workplaces would be established.” According to H. Bagratyan, another important factor for right economic policy is imposing additional taxes on banks that, according to the specialist, the Cabinet doesn’t want to do.
NELLY BABAYAN
