SOME PROGRESS MADE WITH THE 2007 BUDGET
By Karine Mangassarian
Yerkir, Armenia
Nov 13 2006
The 2007 budget was discussed in the National Assembly. The budget
of 2006 was characterized as "social budget". The 207 budget was
characterized in the press as a "pre-election budget": because of
the upcoming elections the government must convince the public that
its efficient work contributes to the improvement of the population’s
welfare.
Head of ARF’s parliamentary faction Hrayr Karapetian called the 2007
budget a "survival budget". Even though some progress has been made
compared to the budget for 2006 and the budget has increased by half
a billion drams, Karapetian believes that since the national currency
has appreciated and the prices of some goods have increased.
Allocations to the social sectors have increased in the 2007 budget.
The salaries of teachers, doctors and scientific workers will be
increased in 2007.
As to the most vulnerable segments of the population, Karapetian
noted that the least progress was made in respect to the pensions.
The pensions and benefits have been slightly increased. The salaries
of civil servants, as well as the minimum salary will be increased.
Benefits paid to the families of soldiers killed in Karabagh,
the disability pensions, and the veterans’ pensions will also be
increased. 415 survivors of the Genocide will receive a monthly
payment of 25 thousand drams instead of the present 5 thousand.
"There is indeed some progress. But when the tax revenue amounts to
only 14% of the GDP we can conclude that shadow economy comprises a
large share of the economy. This implies that the potential of the
tax and customs sectors is not yet fully used," Karapetian notes
adding that in normal countries the tax revenues amount to not less
than 30% of the GDP. "The tax and customs officials keep saying that
tax revenues cannot be increased.
Of course this wouldn’t be possible to do without the necessary
political will which in fact means fighting corruption. If we look
carefully at the sectors that are not taxed we can see that these are
the sectors directly linked with some high-ranking officials. This
is why we cannot increase the pensions, benefit payments, and solve
many other social issues," Karapetian said.
Karapetian mentioned the defense sector noting that even though there
is progress as compared to the last year and 300 million drams has
been allocated to the defense sector, we are still lagging behind our
neighbors. "Of course we have some advantages taking into consideration
the objective reasons – blockade, roads – that have their impact on
the development of our county, but there are some internal issues
that depend on us.
Our problem is the low level of tax and customs revenue," Karapetian
said. Answering the question whether the taxes are mostly collected
form small and medium businesses Karapetian noted, "We could say so.
There is an interesting controversy here: the small and medium
businesses pay their taxes fully while the large businesses that are
in the shadow do not pay any taxes at all.
This means that we have a lot to do in this respect especially that
we do not envisage much support to the small and medium businesses in
the state budget and the credits that are available are not sufficient
to promote SMEs. We have the middle class that wants to increase its
capital and pays its taxes properly. We have the large businesses
that mostly evade taxes. Next year we should pay more attention to
this issue," Karapetian stated.
The ARF’s faction will make a number of proposals on industry and
investment policies, as well as foreign policy during the upcoming
discussions in the National Assembly. One of them is to open a
consulate of Armenia in Batumi. The Armenian Foreign Affairs Minister
has agreed to this proposal taking into consideration the transport
connection with Armenia as well as the Armenian population’s recently
increased interest towards tourism in this region.
Karapetian informed that ARF’s regional structures in all regions
of Armenia have raised a number of issues dealing with capital
construction, renovation of schools and cultural centers, drinking and
irrigation water pipelines, and gas pipelines. These issues will be
included into the package of proposals that the faction is planning to
submit to the government. Karapetian said negotiations are currently
in process to find clear-cut budget solution to these issues.