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PROTEST STRIKE CHALLENGES ARMENIAN GOVERNMENT'S ATTEMPT AT TIGHTER REGULATIONS
Natalia Leshchenko
World Markets Research Centre
Dec 9 2008
Hundreds of taxi drivers have blocked the main square of the
Armenian capital Yerevan in protest against the introduction of new
regulations. The measures were passed in March 2007 with intention
to crack down on tax evasion and improve passenger safety through,
among other things, the introduction of electronic fee meters and
annual state duty of $650US for each car, as well as banning cars
that are over 10 years of age. The introduction of the measures was
deferred several times over protests, with the last deferral term
expiring on 15 January 2009. Taxi drivers started protesting early,
last month, and have secured a nearly ten-fold drop in the annual duty,
but they are now demanding a new deferral until other conditions are
discussed with their representatives.
Significance:The taxi driver strike is a good illustration of the
predicament of enforcing regulation over a nascent private sector. The
regulation is essential, on the one hand, to ensure the rule of law
and proper collection of taxes, and yet, on the other hand, small
and medium entrepreneurs fear being forced out of business over poor
competitiveness. Reasonable compromise appears the best possible
solution, with the drivers' demands on the annual duty drop being
reasonable. The age restriction of cars is a matter of passenger
safety; Transport Minister Gurgen Sargsian has wisely ruled out the
lifting of the age limit. The Armenian government is keen on improving
and simplifying regulation for small businesses at least, but faces
opposition not only from the corruption-prone bureaucracy but small
businesses themselves, who are wary of excessive governmental control.
Natalia Leshchenko
World Markets Research Centre
Dec 9 2008
Hundreds of taxi drivers have blocked the main square of the
Armenian capital Yerevan in protest against the introduction of new
regulations. The measures were passed in March 2007 with intention
to crack down on tax evasion and improve passenger safety through,
among other things, the introduction of electronic fee meters and
annual state duty of $650US for each car, as well as banning cars
that are over 10 years of age. The introduction of the measures was
deferred several times over protests, with the last deferral term
expiring on 15 January 2009. Taxi drivers started protesting early,
last month, and have secured a nearly ten-fold drop in the annual duty,
but they are now demanding a new deferral until other conditions are
discussed with their representatives.
Significance:The taxi driver strike is a good illustration of the
predicament of enforcing regulation over a nascent private sector. The
regulation is essential, on the one hand, to ensure the rule of law
and proper collection of taxes, and yet, on the other hand, small
and medium entrepreneurs fear being forced out of business over poor
competitiveness. Reasonable compromise appears the best possible
solution, with the drivers' demands on the annual duty drop being
reasonable. The age restriction of cars is a matter of passenger
safety; Transport Minister Gurgen Sargsian has wisely ruled out the
lifting of the age limit. The Armenian government is keen on improving
and simplifying regulation for small businesses at least, but faces
opposition not only from the corruption-prone bureaucracy but small
businesses themselves, who are wary of excessive governmental control.