Armenian Minister of Finance Vahe Hovhannisyan and Chairman of the State Revenue Committee Rustam Badasyan have announced that the tax collections planned for 2024 are, in some respects, not being met. This statement regarding the reduction in tax collections, especially against the backdrop of the country's high economic growth rate, has caused significant concern among economists and the public, reports the Economic Journalists Club.
Issues with Tax Collection
During a session of the National Assembly dedicated to the preliminary discussions of the 2023 budget execution, the Minister of Finance and the Chairman of the State Revenue Committee highlighted the existing issues in tax collection. Vahe Hovhannisyan noted that due to various economic factors, the planned tax collections are falling short of expected targets, necessitating adjustments to the plans.
Rustam Badasyan pointed out that the problem is driven by changes in the economic structure. For example, the construction sector has significantly grown and peaked in 2022-2023, but its tax potential will only materialize after the sale of constructed apartments. Preliminary estimates indicate that the Ministry of Finance risks falling short by approximately 60 billion drams (about $150 million), representing a deviation of 3-4%.
Current Tax Revenues
According to the State Revenue Committee, tax revenues from January to May 2024 amounted to 984.1 billion drams (over $2.5 billion), exceeding the same period in 2023 (912.2 billion drams - over $2.3 billion). However, there has been a decline in revenues from value-added tax and excise tax by 3.54% and 9.04%, respectively, causing concern among experts.
The Minister of Finance noted that if it becomes necessary to cut expenditures to address tax collection issues, such measures will be taken. Currently, tax revenues for the reporting period amount to about 828.8 billion drams (over $2.1 billion), which is 63.5% of the first half-year's program target.
Economic Outlook
Former Chairman of the State Revenue Committee David Ananyan emphasized that an economy growing through non-export sectors is unable to generate sufficient tax revenues. The first months of 2024 have confirmed this observation, highlighting the need for structural changes and improved tax administration efficiency.
