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WHEN FILLING THE BUDGET BECOMES A STATE PRIORITY
Babken Tunyan
http://168.am/en/articles/7206
March 6, 2010
Back in the day, when a number of economists and journalists were
warning that the credits and loans received from foreign donors will
became a headache for Armenia, the officials of relevant sectors
would try to calm them down by saying that the foreign debt is in the
allowable limits and would advise not to worry about the state. The
time showed (in the near it will become more evident) that they
were right. But in this case in order to determine the right or
wrong we should understand whether the headache is caused to the
state or average citizens. And if we take into account that there
is enormous difference between the people and the state and that the
officials are demonstrating information far from reality it turns out
that there is no headache for the state. The headache is for average
citizens in the form of taxes and customs fees. A week ago the head
of the World Bank in Armenia Aristomene Varudakis mentioned that the
foreign debt is growing rapidly. But on the other hand he added that
there is no need to worry. All is necessary to be done is to be able
to acquit the debt. "And for that it is necessary to levy more taxes,"
mentioned Varudakis. Now it is this provision that is demonstrated in
the policy course of the government. We even reached the point that
we get to pay to the state for holding a dog in our homes. The rest,
such as fight against oligopolies, diversification of the economy,
supporting the domestic producer, are merely nice words. According
to logic, concrete steps should be taken to recover the economy from
the crisis. It means that first of all the base of taxation should
be increased. This assembles the tactics of trying to scrape the
empty jar of honey to get whatever possible left. However, first of
all it is necessary to fill in the jar with honey (or at least not
ban the jar-filler from doing this) and only then be sufficed with
the desire of eating the honey. In our country the exact opposite
is being done and this is depicted as victory. Two days ago, almost
all the media outlets of the country adverted to the information on
the January-February inflows of the State revenue Committee. Armenian
tax and customs authorities collected a total of 51.1 billion Drams of
different revenues in the first month of 2010, by 22.3% or 9.3 billion
Drams more than a year ago, the ministry of finance reported. According
to the ministry, 40.2 billion Drams were collected as taxes and duties,
of which 21.9 billion Drams were collected as VAT, by 20.5% more than
in 2009 January. Also 3.5 billion Drams were collected as excise taxes,
4.6 billion Drams as profit taxes, 4.4 billion Drams as income taxes,
2 billion Drams as customs duties, 916,2 million Drams as state dues
and 1.7 billion Drams as fixed payments. According to the ministry, the
amount of collected mandatory social insurance payments rose by 41.7%
from 2009 January to 6.8 billion Drams. Other non-tax revenues totaled
4.2 billion Drams or 68.5% of the quarter projection. The Armenian
government plans to collect this year 742 billion Drams in revenues
and spend 935 billion Drams. The projected deficit is 193.4 billion
AMD. It is really good that a positive dynamics is formed. The thing
is that they have tried to impressively deliver this information to
the TV audience. And one of the media outlets added by its part that
the Committee doesn't mention at the expense of what these revenues
were added. We thought that the media reporters are supposed to ask
questions like this to the state officials and not make guesses. For
example, they were supposed to find out how come the economy grows by
2.4% and the state budget inflows - by 8.4%. Maybe if asked they could
have found out that the budget was filled due to the reduction of the
black market. The release would turn out to be more impressive. The
State Revenue Committee is doing its work by trying to collect as much
revenue as possible and as much as mentioned in the budget. Let us
agree that it is possible to collect money only when it exists. But
in this case the Committee has a problem in creating and getting this
money. And it is not its function to reform the economy. In fact
the other state bodies should be in charge of this. It means there
must be a joint approach, the basis of which shouldn't be only levy
maximum amount of money but the increase of the base of taxation. In
our country the logic is different though. As of the activation of
the business then in this field these are only words. As a rule,
when the government speaks about the small and medium businesses it
always mentions the facilitation of the crediting process. Meanwhile,
any bank of Armenia demands stable incomes and mortgage. These are
conditions, the existence of which doesn't require credits any more.
Any businessman, who had to deal with the banks, will confirm these
words. In fact great efforts are needed to strengthen businesses.
There is simply no need to hinder the development of businesses. For
instance, one state structure shouldn't demand from the same citizen
to submit a state form from some other state structure. The citizen
wastes time and energy for some simple piece of paper and gets to
deal with the "sassy" faces of low-class state officials. And this is
happening in the era of high technologies when any 7-year-old kid can
send my e-mail any information to another kid living in Mozambique. By
the way, two days ago our government started to speak with real about
the investment the system of electronic governance, which will reduce
the amount of time spent on documentation, will decrease bureaucracy
and the communication of the citizen with the statesmen and thus lower
the corruption risks. This is a good initiative but as you know it is
not going to be exactly like this. Let us bring another example. The
international partner of the domestic businessman sends the latter
of a catalog with a few sample (let's say perfume) to demonstrate it
to the members of the domestic market. The foreign partner sends the
stuff via the DHL so that it gets here fast. But this stuff remains in
the customs service instead of reaching the domestic businessman. As a
result the businessman here has to pay 10.000 AMD for some paperwork
to get his stuff (worth 10-15 thousand AMD). It seems like a minor
nuance but many people have encountered this and got discouraged even
before they'd start their business. The solution of this wouldn't take
too many efforts from the state. And the use will be more tangible
than all kinds of trainings with their coffee breaks. All is needed
is goodwill to help the businesses and not just levy money.
Babken Tunyan
http://168.am/en/articles/7206
March 6, 2010
Back in the day, when a number of economists and journalists were
warning that the credits and loans received from foreign donors will
became a headache for Armenia, the officials of relevant sectors
would try to calm them down by saying that the foreign debt is in the
allowable limits and would advise not to worry about the state. The
time showed (in the near it will become more evident) that they
were right. But in this case in order to determine the right or
wrong we should understand whether the headache is caused to the
state or average citizens. And if we take into account that there
is enormous difference between the people and the state and that the
officials are demonstrating information far from reality it turns out
that there is no headache for the state. The headache is for average
citizens in the form of taxes and customs fees. A week ago the head
of the World Bank in Armenia Aristomene Varudakis mentioned that the
foreign debt is growing rapidly. But on the other hand he added that
there is no need to worry. All is necessary to be done is to be able
to acquit the debt. "And for that it is necessary to levy more taxes,"
mentioned Varudakis. Now it is this provision that is demonstrated in
the policy course of the government. We even reached the point that
we get to pay to the state for holding a dog in our homes. The rest,
such as fight against oligopolies, diversification of the economy,
supporting the domestic producer, are merely nice words. According
to logic, concrete steps should be taken to recover the economy from
the crisis. It means that first of all the base of taxation should
be increased. This assembles the tactics of trying to scrape the
empty jar of honey to get whatever possible left. However, first of
all it is necessary to fill in the jar with honey (or at least not
ban the jar-filler from doing this) and only then be sufficed with
the desire of eating the honey. In our country the exact opposite
is being done and this is depicted as victory. Two days ago, almost
all the media outlets of the country adverted to the information on
the January-February inflows of the State revenue Committee. Armenian
tax and customs authorities collected a total of 51.1 billion Drams of
different revenues in the first month of 2010, by 22.3% or 9.3 billion
Drams more than a year ago, the ministry of finance reported. According
to the ministry, 40.2 billion Drams were collected as taxes and duties,
of which 21.9 billion Drams were collected as VAT, by 20.5% more than
in 2009 January. Also 3.5 billion Drams were collected as excise taxes,
4.6 billion Drams as profit taxes, 4.4 billion Drams as income taxes,
2 billion Drams as customs duties, 916,2 million Drams as state dues
and 1.7 billion Drams as fixed payments. According to the ministry, the
amount of collected mandatory social insurance payments rose by 41.7%
from 2009 January to 6.8 billion Drams. Other non-tax revenues totaled
4.2 billion Drams or 68.5% of the quarter projection. The Armenian
government plans to collect this year 742 billion Drams in revenues
and spend 935 billion Drams. The projected deficit is 193.4 billion
AMD. It is really good that a positive dynamics is formed. The thing
is that they have tried to impressively deliver this information to
the TV audience. And one of the media outlets added by its part that
the Committee doesn't mention at the expense of what these revenues
were added. We thought that the media reporters are supposed to ask
questions like this to the state officials and not make guesses. For
example, they were supposed to find out how come the economy grows by
2.4% and the state budget inflows - by 8.4%. Maybe if asked they could
have found out that the budget was filled due to the reduction of the
black market. The release would turn out to be more impressive. The
State Revenue Committee is doing its work by trying to collect as much
revenue as possible and as much as mentioned in the budget. Let us
agree that it is possible to collect money only when it exists. But
in this case the Committee has a problem in creating and getting this
money. And it is not its function to reform the economy. In fact
the other state bodies should be in charge of this. It means there
must be a joint approach, the basis of which shouldn't be only levy
maximum amount of money but the increase of the base of taxation. In
our country the logic is different though. As of the activation of
the business then in this field these are only words. As a rule,
when the government speaks about the small and medium businesses it
always mentions the facilitation of the crediting process. Meanwhile,
any bank of Armenia demands stable incomes and mortgage. These are
conditions, the existence of which doesn't require credits any more.
Any businessman, who had to deal with the banks, will confirm these
words. In fact great efforts are needed to strengthen businesses.
There is simply no need to hinder the development of businesses. For
instance, one state structure shouldn't demand from the same citizen
to submit a state form from some other state structure. The citizen
wastes time and energy for some simple piece of paper and gets to
deal with the "sassy" faces of low-class state officials. And this is
happening in the era of high technologies when any 7-year-old kid can
send my e-mail any information to another kid living in Mozambique. By
the way, two days ago our government started to speak with real about
the investment the system of electronic governance, which will reduce
the amount of time spent on documentation, will decrease bureaucracy
and the communication of the citizen with the statesmen and thus lower
the corruption risks. This is a good initiative but as you know it is
not going to be exactly like this. Let us bring another example. The
international partner of the domestic businessman sends the latter
of a catalog with a few sample (let's say perfume) to demonstrate it
to the members of the domestic market. The foreign partner sends the
stuff via the DHL so that it gets here fast. But this stuff remains in
the customs service instead of reaching the domestic businessman. As a
result the businessman here has to pay 10.000 AMD for some paperwork
to get his stuff (worth 10-15 thousand AMD). It seems like a minor
nuance but many people have encountered this and got discouraged even
before they'd start their business. The solution of this wouldn't take
too many efforts from the state. And the use will be more tangible
than all kinds of trainings with their coffee breaks. All is needed
is goodwill to help the businesses and not just levy money.