Taxation base to be revised
Armenia's economy has entered the stage of recovery with the 5.5% growth of the Gross Domestic Product during the first quarter of this year," Prime Minister Tigran Sargsyan announced today.
"Despite the 5.5% growth, we still see a decline in construction. On the one hand, this goes to show that we are seeing a diversification of the economic system and the decline of dependency on growth of construction, and on the other hand, it means that there are still no private investments being made in construction," said Sargsyan.
According to the Prime Minister, there is often a misunderstanding that the government has funded construction. "There has been no such thing. Cash flows have not gone to construction, but we have called on and promoted construction in order for trade banks to fund construction of incomplete buildings which are almost ready and whose market price for subjects and property are extremely high."
According to him, 75% of construction was funded at the price of the private sector in 2008 and private investments are currently being made for buildings that are in the process of construction.
The Prime Minister also informed that the export of construction materials has tripled in the first quarter of this year compared to the same period last year and there are positive indicators in other spheres as well.
"The structural change of our economy in the first quarter of 2010 compels us to reconsider the taxation base and its evaluations," announced Prime Minister Tigran Sargsyan.
"I have assigned the Ministry of Finance to present new calculations of tax base within this week based on new facts and take into account the structural changes, the analyses of 2008 and 2009 and how taxing must be in 2010 because this high GDP deteriorates the relationship between taxes and the GDP. For 2010, we have foreseen a 0.4 increase of the taxes-GDP indicator. At the moment, taking into account the fact that the growth of the GDP is 3.5 times more than we had envisaged for the year, it is obvious that the taxes-GDP indicator has deteriorated in the first quarter compared to the same quarter of last year. This means that we must ascertain the taxing for 2010," he said.
The Prime Minister added that despite all problems, flaws and defects, Armenia's business environment has improved over the past two years and that is the most important impetus for economic growth.
"Our objective is to move down from macroeconomic management to the micro level and implement concrete projects that create jobs," said the Prime Minister.
