KOCHARIAN IN FRESH ATTACK ON ARMENIAN TAX BODIES
By Emil Danielyan

Radio Liberty, Czech Rep.
Jan 10 2007

President Robert Kocharian on Wednesday accused Armenia’s tax
authorities of lacking the will to combat widespread tax evasion
in earnest and warned them against any involvement in the upcoming
parliamentary elections.

Kocharian subjected the State Tax Service (STS) and the State Customs
Committee (SCC) to unusually harsh criticism in a meeting attended
by virtually all key government officials, including Prime Minister
Andranik Markarian, Finance Minister Vartan Khachatrian and even the
national police chief, Hayk Harutiunian. As recently as on December
8 he met most of these officials to similarly slam the collection of
state revenues.

Kocharian was quoted by his office as saying that he gathered them
again to "bring you back from holiday spirits and tables to a working
state" and to remind them of a sizable rise in government spending
envisaged by Armenia’s budget for 2007.

"I don’t see in the [tax collection] services sufficient energy to
fight against the shadow economy," he said in remarks released by the
presidential press service. "There is improvement, but it can not be
considered satisfactory in the existing situation."

While noting that state revenues have grown substantially in recent
years, Kocharian stressed that they equal less than 16 percent of
Armenia’s Gross Domestic Product — one of the lowest proportions in
the former Soviet Union. "When we compare our situation with that of
Eastern European countries, Russia or Ukraine, [it turns out that]
you perform poorly," he snapped.

Kocharian would not say whether the tax collection agencies should
get tougher on the country’s wealthiest businessmen that have close
ties with his administration and are believed to grossly underreport
their earnings. He warned instead that officials from the STS and
the SCC must have "no connection whatsoever" with the parliamentary
elections expected in May.

"Your main job is to meet the budget’s revenue targets," he said.

"During this time you must do a better job … The pre-election mood
must have no influence on the quality of the work of the tax and
customs services."

It was not clear whether Kocharian’s unease stemmed from a recently
passed legal amendment that allowed STS employees to be members of
political parties. The change, effective from July 1, is widely seen as
a boost to the governing Republican Party (HHK). Many senior employees
of other government agencies are already affiliated with the HHK.