Opposition members and economic experts critical of the Armenian government have discarded as another ‘show’ the recent report suggesting that scores of companies have ‘come clean’ following a warning by Prime Minister Hovik Abrahamian to stop evading taxes.
At a meeting with business leaders in May, a month after assuming his duties as prime minister, Abrahamian pledged to create a level-playing field for all businesses, at the same time warning leading companies that they must stop evading taxes and abusing their market positions by July 1 or face a tougher crackdown by tax authorities. He also promised to publish the results of the campaign against tax evasion every 10 days after the deadline.
Armenia - Prime Minister Hovik Abrahamian meets with business leaders, Yerevan,14May,2014
This week the Tax Service published the names of 98 companies that had “specified” their tax obligations by July 1. These companies reportedly raised their expectations of profits for 2014, pledging to pay a total of 391 million drams (about $960,000) more in profit taxes during the year.
Meanwhile, skeptics note that there are no companies belonging to top ‘oligarchs’ or the families of top officials in the list published by the tax authorities. Some economic experts and opposition members imply that the process is just another ‘imitation’ and will make no difference in the long run.
Hayk Gevorkian, an economic analyst writing for the Haykakan Zhamanak daily, estimates that by these companies’ ‘coming clean’ Armenia’s shadow economy gets reduced by only 1.5 percent. “Meanwhile, even according to modest estimations, the amount of shadow economy in Armenia makes 30-35 percent. Other estimations suggest that it may be as high as 45 percent,” he said.
Gevorkian stressed that companies belonging to the extended families of top officials, including powerful Finance Minister Gagik Khachatrian, who is supposed to lead the campaign against tax dodgers, continue to work in the non-taxed sector of the economy. “The bubble that is being inflated now will burst in a few months,” he said.
Opposition Armenian National Congress lawmaker Aram Manukian also spoke skeptically about the ability of Prime Minister Abrahamian or any other head of the government to make a ‘tax revolution’ in Armenia.
“I told Hovik Abrahamian on the very first day that he would not be able to do anything and that he would be discredited even sooner than [his predecessor] Tigran Sarkisian, who at least dragged out the process for a couple of years. This period will be limited to several months for Hovik Abrahamian. The past two months have shown that he is not able to do anything, nor does he want to do anything. On the day of his appointment [President] Serzh Sarkisian set the bar to him that he cannot overcome. He cannot destroy the system in which he has lived and prospered and will continue to live and prosper as long as there is this usurpation of power,” Manukian said.