Will the New Tax Plan in Armenia Work?

hetq
17:45, November 6, 2011

Yesterday just over a month after the government revealed its $2.5
million budget plan for 2012 Prime Minister Tigran Sarkisian explained
just where the $268 million in tax revenues was to be generated. There
are three primary sources it seems: from a tax on luxury automobiles,
a tax hike on the upper class, and high excise taxes on expensive
alcoholic beverages.

First let’s look at the car tax. He proposed that the owner of a car
estimated to be worth $90,000 or more be taxed, estimating the
collected amount to reach around $2.6 million (1 billion dram). This
expectation is a bit naïve thinking, however, since the number of cars
priced that high is so infinitesimal that it will be hard to believe
so much will be collected in taxes. There are ways around paying that
`luxury tax’ of course. Since the customs department determines the
value of automobiles entering the country and the customs fees
required to be paid using whatever mind-numbing algorithms they
employ, it certainly wouldn’t be difficult to pay an official a bribe
to set the worth of the car at $89,000, thereby avoiding the luxury
tax. For more comments see Footprints.