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THE SCALES OF OLIGARCHY AND SOCIETY
James Hakobyan
Lragir.am News
http://www.lragir.am/engsrc/country23563.html
15:32:41 - 30/09/2011
The draft state budget 2012 envisages a 6% increase of tax revenues.
By the approximate calculations of the government, it is about 100
billion drams. It is not a secret that the government needs money in
the pre-election year. But besides election bribes to be given out
on "slush" funds, the government needs to take some social steps
before the elections. However, will the economy be able to "meet"
the government's need?
The chairman of the State Revenue Committee Gagik Khachatryan, for
instance, announced in the government meeting that this estimate
is unprecedented and unjustified, especially in the period of the
economic crisis.
The chairman of the SRC announced that this estimate is not realistic.
It is clear, that Khachatryan is thereby trying to solve his own
problem and boost his "price" in the government where his position is
regularly shaken by scramble inside the government. It is also clear
that Khachatryan will not raise his price to the point from where he
will be easily sacked.
He will certainly assume the task to perform the budget rather than to
resign. Although when the SRC chairman announces that the estimate is
not justified, he can resign without assuming the burden of unjustified
indices. However, Khachatryan has not announced about it.
Later he even expressed willingness to ensure the performance of the
envisaged figure.
However, besides the inner compulsion of officials, it is important to
know where the growth of tax revenues will lead the Armenian economy.
It has started growing slowly since the over-critical year of 2009.
However, it would be exaggerated a bit to say that the economy of
Armenia has recovered from crisis.
The economy of Armenia has reached a point where 1 or even 5 and
maybe also 10 percent growth in statistics is crisis considering
the serious problems and strategic competition with the oil and gas
economy of Azerbaijan.
On the other hand, it is clear that Armenia is facing a serious
problem of tax collections, a problem of the ratio of tax to GDP. In
the GDP, the share of taxes is small, which is regularly noted by
the international financial organizations. They constantly mention
inefficiency of reforms in tax administration, pointing to low rate
of taxes paid by oligarchs.
However, will the unprecedented growth of tax revenues envisaged in the
draft budget 2012 be ensured at the expense of the oligarchs living on
excess profits mainly from imports and commerce? If the excess profit
of the oligarchs is going to be taxed, together with the excess profit
of official-oligarchs, including the chairman of the SRC as reported
by the press, the envisaged growth is quite realistic. The economy of
the Armenian oligarchic system can even afford to pay an additional
200, or even 300 billion drams.
The question is who will pay the tax, the oligarchic system or the
SMEs. The prime minister announces that legislative changes will be
made for the improvement of tax administration, and if one has more,
one pays more. It is good that these changes are brought into being
pursuant to the text rather than to the usual practice in Armenia. The
point is that so far the so-called reforms have inflicted disaster on
SMEs because the more the government changes the law to shift the load
of the SMEs onto the almost empty shoulders of the major businesses,
the heavier the burden of the SMEs is made by the major businesses
together with the government.
Consequently, if a significant growth of tax revenues is envisaged,
SMEs have reason to worry because they should know better what
it means.
Will something change in 2012? It seems that the government must avoid
infuriating the SMEs in the pre-election year? On the other hand,
for the same purpose, the government must avoid infuriating the major
businesses because the oligarchs and their human and material resources
ensure the result desired by the government in an unconstitutional way.
When the government wishes to run in the elections on a Constitutional
path, it is a problem. However, the pigs will learn to fly earlier
than the Armenian government will take the Constitutional track.
In fact, in this case, there are no options in between, and either
the government-oligarchy alliance will be troubled or it will trouble
SMEs. It is possible, of course, that the oligarchy-government alliance
will decide to trouble itself for the sake of their global success,
until after the election phase. In this case, however, the question
is whether the oligarchy will agree to trouble itself for free or
will set forth demands in return for that. However, what matters is
what demands the society will set forth, including the SMEs.
James Hakobyan
Lragir.am News
http://www.lragir.am/engsrc/country23563.html
15:32:41 - 30/09/2011
The draft state budget 2012 envisages a 6% increase of tax revenues.
By the approximate calculations of the government, it is about 100
billion drams. It is not a secret that the government needs money in
the pre-election year. But besides election bribes to be given out
on "slush" funds, the government needs to take some social steps
before the elections. However, will the economy be able to "meet"
the government's need?
The chairman of the State Revenue Committee Gagik Khachatryan, for
instance, announced in the government meeting that this estimate
is unprecedented and unjustified, especially in the period of the
economic crisis.
The chairman of the SRC announced that this estimate is not realistic.
It is clear, that Khachatryan is thereby trying to solve his own
problem and boost his "price" in the government where his position is
regularly shaken by scramble inside the government. It is also clear
that Khachatryan will not raise his price to the point from where he
will be easily sacked.
He will certainly assume the task to perform the budget rather than to
resign. Although when the SRC chairman announces that the estimate is
not justified, he can resign without assuming the burden of unjustified
indices. However, Khachatryan has not announced about it.
Later he even expressed willingness to ensure the performance of the
envisaged figure.
However, besides the inner compulsion of officials, it is important to
know where the growth of tax revenues will lead the Armenian economy.
It has started growing slowly since the over-critical year of 2009.
However, it would be exaggerated a bit to say that the economy of
Armenia has recovered from crisis.
The economy of Armenia has reached a point where 1 or even 5 and
maybe also 10 percent growth in statistics is crisis considering
the serious problems and strategic competition with the oil and gas
economy of Azerbaijan.
On the other hand, it is clear that Armenia is facing a serious
problem of tax collections, a problem of the ratio of tax to GDP. In
the GDP, the share of taxes is small, which is regularly noted by
the international financial organizations. They constantly mention
inefficiency of reforms in tax administration, pointing to low rate
of taxes paid by oligarchs.
However, will the unprecedented growth of tax revenues envisaged in the
draft budget 2012 be ensured at the expense of the oligarchs living on
excess profits mainly from imports and commerce? If the excess profit
of the oligarchs is going to be taxed, together with the excess profit
of official-oligarchs, including the chairman of the SRC as reported
by the press, the envisaged growth is quite realistic. The economy of
the Armenian oligarchic system can even afford to pay an additional
200, or even 300 billion drams.
The question is who will pay the tax, the oligarchic system or the
SMEs. The prime minister announces that legislative changes will be
made for the improvement of tax administration, and if one has more,
one pays more. It is good that these changes are brought into being
pursuant to the text rather than to the usual practice in Armenia. The
point is that so far the so-called reforms have inflicted disaster on
SMEs because the more the government changes the law to shift the load
of the SMEs onto the almost empty shoulders of the major businesses,
the heavier the burden of the SMEs is made by the major businesses
together with the government.
Consequently, if a significant growth of tax revenues is envisaged,
SMEs have reason to worry because they should know better what
it means.
Will something change in 2012? It seems that the government must avoid
infuriating the SMEs in the pre-election year? On the other hand,
for the same purpose, the government must avoid infuriating the major
businesses because the oligarchs and their human and material resources
ensure the result desired by the government in an unconstitutional way.
When the government wishes to run in the elections on a Constitutional
path, it is a problem. However, the pigs will learn to fly earlier
than the Armenian government will take the Constitutional track.
In fact, in this case, there are no options in between, and either
the government-oligarchy alliance will be troubled or it will trouble
SMEs. It is possible, of course, that the oligarchy-government alliance
will decide to trouble itself for the sake of their global success,
until after the election phase. In this case, however, the question
is whether the oligarchy will agree to trouble itself for free or
will set forth demands in return for that. However, what matters is
what demands the society will set forth, including the SMEs.