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The Scales Of Oligarchy And Society

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  • The Scales Of Oligarchy And Society

    THE SCALES OF OLIGARCHY AND SOCIETY
    James Hakobyan

    Lragir.am News
    http://www.lragir.am/engsrc/country23563.html
    15:32:41 - 30/09/2011

    The draft state budget 2012 envisages a 6% increase of tax revenues.

    By the approximate calculations of the government, it is about 100
    billion drams. It is not a secret that the government needs money in
    the pre-election year. But besides election bribes to be given out
    on "slush" funds, the government needs to take some social steps
    before the elections. However, will the economy be able to "meet"
    the government's need?

    The chairman of the State Revenue Committee Gagik Khachatryan, for
    instance, announced in the government meeting that this estimate
    is unprecedented and unjustified, especially in the period of the
    economic crisis.

    The chairman of the SRC announced that this estimate is not realistic.

    It is clear, that Khachatryan is thereby trying to solve his own
    problem and boost his "price" in the government where his position is
    regularly shaken by scramble inside the government. It is also clear
    that Khachatryan will not raise his price to the point from where he
    will be easily sacked.

    He will certainly assume the task to perform the budget rather than to
    resign. Although when the SRC chairman announces that the estimate is
    not justified, he can resign without assuming the burden of unjustified
    indices. However, Khachatryan has not announced about it.

    Later he even expressed willingness to ensure the performance of the
    envisaged figure.

    However, besides the inner compulsion of officials, it is important to
    know where the growth of tax revenues will lead the Armenian economy.

    It has started growing slowly since the over-critical year of 2009.

    However, it would be exaggerated a bit to say that the economy of
    Armenia has recovered from crisis.

    The economy of Armenia has reached a point where 1 or even 5 and
    maybe also 10 percent growth in statistics is crisis considering
    the serious problems and strategic competition with the oil and gas
    economy of Azerbaijan.

    On the other hand, it is clear that Armenia is facing a serious
    problem of tax collections, a problem of the ratio of tax to GDP. In
    the GDP, the share of taxes is small, which is regularly noted by
    the international financial organizations. They constantly mention
    inefficiency of reforms in tax administration, pointing to low rate
    of taxes paid by oligarchs.

    However, will the unprecedented growth of tax revenues envisaged in the
    draft budget 2012 be ensured at the expense of the oligarchs living on
    excess profits mainly from imports and commerce? If the excess profit
    of the oligarchs is going to be taxed, together with the excess profit
    of official-oligarchs, including the chairman of the SRC as reported
    by the press, the envisaged growth is quite realistic. The economy of
    the Armenian oligarchic system can even afford to pay an additional
    200, or even 300 billion drams.

    The question is who will pay the tax, the oligarchic system or the
    SMEs. The prime minister announces that legislative changes will be
    made for the improvement of tax administration, and if one has more,
    one pays more. It is good that these changes are brought into being
    pursuant to the text rather than to the usual practice in Armenia. The
    point is that so far the so-called reforms have inflicted disaster on
    SMEs because the more the government changes the law to shift the load
    of the SMEs onto the almost empty shoulders of the major businesses,
    the heavier the burden of the SMEs is made by the major businesses
    together with the government.

    Consequently, if a significant growth of tax revenues is envisaged,
    SMEs have reason to worry because they should know better what
    it means.

    Will something change in 2012? It seems that the government must avoid
    infuriating the SMEs in the pre-election year? On the other hand,
    for the same purpose, the government must avoid infuriating the major
    businesses because the oligarchs and their human and material resources
    ensure the result desired by the government in an unconstitutional way.

    When the government wishes to run in the elections on a Constitutional
    path, it is a problem. However, the pigs will learn to fly earlier
    than the Armenian government will take the Constitutional track.

    In fact, in this case, there are no options in between, and either
    the government-oligarchy alliance will be troubled or it will trouble
    SMEs. It is possible, of course, that the oligarchy-government alliance
    will decide to trouble itself for the sake of their global success,
    until after the election phase. In this case, however, the question
    is whether the oligarchy will agree to trouble itself for free or
    will set forth demands in return for that. However, what matters is
    what demands the society will set forth, including the SMEs.

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