Since I discovered that Armenian opposition had only 132 followers on Facebook (now they have 134) I thought of brief review of their 100 steps, that is called PROPOSAL/PROGRAM FOR A SYSTEMATIC REFORM OF SOCIO-ECONOMIC POLICIES”.

The 100 steps were published on February 22, 2010 and were never updated since then. You can find them on Armenian National Congress (ANC) website here http://www.anc.am/en/60/358/.

After this analysis that covers tax and customs policy part you are encouraged to compare these 100 steps with 13 steps presented here, the latter does not have any monopoly and can be used both by opposition and our helpless government.

Here is what opposition’s 100 steps say:

“Redistribution of tax burden from SMEs onto big businesses”, and then later “even distribution of tax burden”.

It’s self-contradicting. You cannot burden big businesses and claim that the tax burden is even. Burdening big business means burdening big employer, big procurer, big investor, sometimes even big charity. It’s better not to burden anyone but provide solutions.

Next: “Bringing minimum salary closer to the size of average salary”.

It is unclear how close ANC wants to bring it, 3%, 10%, 20, 50 or 70%. Or maybe closer. The document of this importance and magnitude should be more precise.

Next: “Overtaxing of highest salaries“.

I’m afraid if we start to overtax high salaries no world-class professional will come to Armenia, because his/her salary will not only be taxed, but “overtaxed”. And again, it is not clear what ANC means by highest salary. Clear figures would help to understand this.

Next: “Taxation of elite construction. Subsidizing construction in the peripheries. Taxation of properties sales. An average 10% construction tax should be set up. This tax will be differentiated by the territorial principle: 0% (in some cases even -10% if the state subsidizes the construction) for peripheries and 15% for instance for the center of Yerevan.“

This means no affordable apartments in the center of Yerevan. If they are expensive now, they will be much more expensive after additional construction taxing. Young families, especially those having corporate ties with the center of the city will not salute this. In addition, investors will have to increase prices for residential or commercial property rent.

Next: “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.”

This is unfair. If an individual has 50 and more hectares of land, but has no income – he/she should not be taxed only because he/she has that land. The same applies to harvest, if an individual has 50 hectares, and that’s a forest or a mountain, the state should not (and simply can not) valuate his/her harvest or income and tax him/her.

Next: “State control of the gambling business. Existence of non-state lottos, lotteries and dice should be excluded. The exclusive right of exploiting such institutions should be granted to the RA Finance Ministry. Operating totalizators, gambling (cultural) institutions should work under supervision of state representatives. In all casinos and such enterprises the state should be a share holder and have its representative.”

The state, especially a liberal european state should not control business. The proposal says that all gambling and lotto businesses should work under supervision of state representatives. I don’t want to compare, but even China does not do it.

Next: “Exclusion of tax remissions. No subject carrying out economic activity (funds, religious organizations, any charity) should have tax privileges.“

During all these 21 years of independence Armenia heavily depended on Diaspora charity. Now, Armenian opposition wants to tax that charity.

Overall conclusion: I will have to say that to my disappointment the document has many vague passages and does not precisely specify strategic figures or percentages. It calls for more taxing, overtaxing and overburdening. Instead of offering alternative solutions that ease taxation burden, spark entrepreneurship and invite investors, Armenian opposition wants to make it harder, heavier and more expensive, it discourages charity and wants more state control over businesses.

I would want this to be my opinion. But this is simply what our opposition says.

Make sure to check these simple alternative 13 steps too.