Local Government Committee Discusses Decentralizing Tax Dept.

YEREVAN (Noyan Tapan)–The meeting of the Presidential Local Government Committee presided over by the Committee Chairman Vahan Hovanessian discussed Tuesday the issue of decentralizing the Tax Inspectorate of Armenia. The presidential advisor–former chief of the Tax Inspectorate–Artashes Toumanian and deputy chief of the Tax Inspectorate–Samvel Abrahamian were invited to the meeting as experts.

Toumanian noted that there is no system of local taxes in the country (only that of local dues and paymen’s)–and under the constitution tax-payers are liable to calculate and pay taxes on their own.

Toumanian believes that the Tax Inspectorate should register tax-payers–collect taxes–impose sanctions and develop relevant mechanisms. These functions of the state shouldn’t be decentralized–he added.

In Armenia–the budgets of local government bodies (LGB) are formed out of land and estate taxes–part of income taxes (15 percent) and public subsidies. Toumanian said that in many countries LGBs are "fed" only by the estate tax which includes the land tax.

The increase in the share of income tax in the LGBs may arouse "powerful" community leaders’ desire to re-register "big" tax-payers in the communities in their charge and cause conflicts.

Toumanian said that the lowest and highest limits of tax rate can be set and free hand within these limits given to LGBs. The LGBs’ powers should be restricted but clear–and no one should interfere.

The deputy chief of the Tax Inspectorate Samvel Abrahamian presented the dynamics of tax sums received by communal budgets from physical entities.

In 1995-1996 the revenue from the land tax made up 1.5 and 1.9 billion drams respectively. In 1997–2.9 billion drams (50 percent as much)–during 11 months of 1998–3.4 billion drams (18 percent as much). This year the projected revenue is 3.7 to 3.8 billion drams. Abrahamian thinks that the revenue from estate tax makes up 40 percent of tax basis–from land tax–60 percent.

As to the revenue from income taxes–the situation gives more hope.

To improve the situation with collecting estate taxes–the Tax Inspectorate is developing a number of plans–one of which is to make use of a tax inspector’s services.

To promote the operation of private enterprises–a suggestion was made at the meeting that the estate tax should be raised–which will make the owners sell the ‘unnecessary’ enterprises and keep what can be operated.

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