Government Has No Ambition to Raise Taxes, Says Finance Minister

The government does not have much room to reduce the tax-to-GDP ratio, considering infrastructure and social expenditures, while at the same time, it has no ambition to raise them, understanding that at this stage, a tax increase cannot lead to an increase in efficiency.

According to "Armenpress," this was stated by the RA Minister of Finance, Vahe Hovhannisyan, during the presentation of the World Bank report "Armenia's Economic Pulse: Fairer Markets for Inclusive Growth."

Fabrizio Zarcone, the World Bank Country Manager for Armenia, addressing the economic growth forecasts for Armenia, noted: "Although the growth rate is gradually becoming more moderate and slower, it is nevertheless quite robust and strong."

According to him, additional efforts should be made to maintain and continue the growth rate.

He inquired what additional reforms the government is planning to strengthen the business environment, promote healthy markets, and competition.

"Yes, in recent years, great successes have been recorded in Armenia in terms of economic growth. We are glad that economic growth is also accompanied by a reduction in poverty, a decrease in inequality, and a rise in employment. In my perception, we are simply closing the gap between potential and reality that we have had for a long time. And for the coming years, we really need to create the preconditions to increase that potential," said Vahe Hovhannisyan.

The minister emphasized the importance of attracting investments.

"I believe that the future development of Armenia should be linked to the inflow of foreign investments, so that we can raise our productivity, worldview, and work culture to a new level," Hovhannisyan noted, adding that many actions are being taken for this purpose.

The minister expressed hope that a law "On Investments" will be available in the near future.

Regarding what the Ministry of Finance is doing to create a favorable environment for businesses and attract investments, Hovhannisyan assured that in recent years, actions have been aimed at creating a fair environment without distortions.

"We have identified an important issue, which was also reflected in the World Bank report: our businesses complain about the frequent changes in tax legislation. We have taken this criticism seriously and agree with it. Starting next year, we will link the amendment of the Tax Code to the budgetary process. And we will implement it in that cycle. We will present all tax changes to the discussion of the National Assembly and the public in one package, once a year. And we will discuss our expenditure policies in conjunction with our revenue policies," the minister said.

Conceptual discussions are currently underway regarding the future form of tax policy. They plan to present the concept at the end of this year.

He noted that they do not have much room to reduce the tax-to-GDP ratio, considering the important infrastructure and social expenditures the Government faces.

"Thus, we do not have much room for large reductions. At the same time, we do not have ambitions for large increases either, because we understand that in Armenia, at least at this stage, raising taxes cannot lead to an increase in efficiency. And we need to leave more money with our businesses to maintain dynamism and stimulate investments in productivity," Hovhannisyan said.

Soon, they will present a draft law "On Accelerated Depreciation," which will allow investors to depreciate capital investments more quickly.