It is good to realize that the opposition finally came out with a platform and plan for economy change, stepping back from calls for revolution, vendetta, prisoning of guilty, etc.
I was reading ANC’s 100 steps on their website, and found that it does not even qualify to be a serious blog post. My first impression was, the person(s) who wrote this simply do not want power, as they showed in their 100 steps that they cannot manage it. (I had the same impression when recently A1+ forged their bid for TV license, and then blamed the Government for disqualifying them.)
My second impression, rather a question in my mind was, does this really differ from today’s Government platform? In many ways it was simply a repetition of what today’s Government plans to do. You know, those usual blah-blah-blahs with no precise timeframe or no measurable targets or those communist-like agendas.
But the overwhelming question in my mind, crossing every single paragraph I read like a red ribbon was – oh my God, who wrote this?? It appeared those 100 steps were written by a group of economists under scientific leadership of Hrant Bagratyan. I must confess I do respect him and I agree with some of his statements. But this documents is made for gathering people to Liberty Square rather than proposing a serious plan for economy reconstruction.
I read only first 26 points, called Tax and Customs Policy. I could not read the rest.
My general observations are:
Although the paper says that it reflects only general views, with no details, but we all know that the devil is in the details… The details, added later can literally change everything what’s there now.
It was clear that the paper could be 97 steps, 83 steps or 104 steps, but 100 steps sounds perfectly good. 100%.
The paper mentions coming 10-15 years, as if it says – we are gonna be in power for 2-3 presidential terms.
More detailed, again only main issues:
a) The main thing that gets your attention from the first paras – redistribution of wealth, i.e. taking a tax burden from SMEs and burdening big businesses with taxes.
Now few questions. Will big business support ANC after this? Forget it. Will big business do everything so current government stays in power? Yes, of course. And finally, who’s got the money today? Right, big business.
Taking burden from one and burdening the other is not the best policy one can offer.
b) I really do not know where to start. The para reads: “Bringing minimum salary closer to the size of average salary. For the coming 10-15 years the size of minimum salary should be brought closer to the average salary which would be an efficient mechanism for reducing specific weight of shade economy.”
It never mentions how much the minimum salary will be. So who cares? And I still do not understand why this was in Tax and Customs policy section.
c) Taxation of elite construction is offered, in the center of Yerevan it will be 15%. It means elite property in the center of Yerevan will be at least 15% higher in price. No comment, what can I say… This is done to get the bid sharks and make them pay taxes, but who will suffer at the end? Young families of course.
d) This one is funny: “For real estate property sold the second time an average tax of 5% for profit should be set”.
For the second time? Within a year? Two years? Seventeen years? Be cautious, do not sell your property for the second time during your life, even if you are 98 years old they will tax you, because when you were 24 you sold your 1-room apartment in Ijevan.
e) The paper is very political, being an economic paper it simply breaths politics, see: “Prohibition of profit tax prepayments. The faulty practice of making prepayment from the profit tax should be excluded. The taxpayer does not should credit the state. Especially as this principle has never worked with big taxpayers who as a rule are high ranking public officials.”
Leaving alone bad English, which serious economist will say the last sentence in presenting an economy reform plan? No, lets be honest.
f) The fairy tale: “VAT decrease; circulation tax application. VAT should be set at 18%. For separate products a classified (lower) VAT scheme should apply. Later, after carrying out certain work with EU and Russian Federation, VAT should be replaced with a 5-7% circulation tax. Later corporative taxation system should be implemented.”
When?? Remember I told you the devil is in the details. As this is not realistic, the ANC prefers not to put any (even soft) deadline there. But as political paper it should contain this para. And what does “certain work with EU and Russian Federation” mean?:)
So when you ask in the future – what’s with VAT? When will it become 5%? ANC will answer you, we carry out certain work with EU and Russian Federation, oh, and, we never told you any deadline.
g) This one is simply a catastrophe: “Special taxation of big landowners. Big landowners (50 hectares and more) should be taxed with the same regime as industry, trade etc. In this case the mechanism of harvest and income valuation should apply instead of land cadastral valuation.”
And if the land is a forest, or lake, the owner should still pay tax, or, cut the forest and “have harvest” to be able to pay taxes.
How do you valuate harvest? Let us suppose I decide not to plant anything for 20 years, as this is my own land, lake, etc. So I have no harvest. Why should I pay taxes based on your “harvest valuation” system?
h) The paper reads: “Casinos should be allocated separate areas in distant borderline areas; their presence in Yerevan, Gyumri and Vanadzor and recreation areas should be excluded.”
I was trying to see what is different form today’s policy.
i) And finally, this kills the last drop of hope: “Exclusion of tax remissions. No subject carrying out economic activity (funds, religious organizations, any charity) should have tax privileges.”
I am really sorry for all those numerous charity organizations as well as Armenian Diaspora helping our country as everything they do will soon be taxed. Congratulations.
Again, I read only first 26 steps of those 100 steps, called Tax and Customs policy. I hope you do understand why I could not continue.
I honestly want to witness strong and serious opposition in this country, as this is part of a formula for getting better, stronger, wealthier, happier, etc..
But unfortunately, this remains only a dream.
Guest post contributed by www.armenia.im