The most important event of the last week was indeed the increase of the gas price. It is an economic event that will have a negative impact on the whole economy of the country. It is also possible that a new chain of revision of prices may be formed. In the public opinion the Economic Regulatory Commission is only a formal and stapling structure that gives consent to everything. It mostly conducts advocacy. It has been the same picture for years. The society is informed of the increase of the bills of energy, water and gas via this commission. First they announce that the commission has received an appeal to increase the price and that they have started to examine it. The period for examination is allotted to temper and filter the public discontent and prepare the society to the new negative changes. After publicizing the rumor of increase in two or three months the commission holds a session and agrees to raise the price. In order to “caress” the society they announce that they fixed a lower price than the applicant organization claimed. Same way was formed the public opinion during the soviet times. Several months prior to the increase of prices the relevant bodies would circulate the rumors on the increase of this or the other item. The society would complain by saying that the rumor of the inflation is false and cannot possibly happen in the near future. After the appeasement of passions they would say that “at the request of the workers” they have raised the price of certain goods. In our modern life they don’t use the expression “at the request of the workers” perhaps because of the absence of the class of workers. But I may dare to say that in the current situation our government takes on the role of the “workers.” It’s been several years that our entrepreneurs have been complaining about the Value-Added Tax (VAT). This 20$ tax has long ago become one of the obstacles for the progress of economy. This law adopted in 1997 has had 45 revisions ever since. The only thing that remained unchanged is the provision on the 20%. This is percentage, which has become the level of tardiness of our government. But first it is the source of joyfulness. Every appeal for the increase of commodity prices is a holiday for the government. It allows providing a new “inert” income for the budget. Instead of implementing complicated projects to improve the plight of the economy the government waits for another wave of increase of utility prices. As a result, every time the citizens pay their bills they remember the government for exactly 20%. When the fee for electrical power was 25 AMD, the government would “grab” 5 AMD for the budget as for the VAT. And when there was an appeal filed to the Regulatory Commission to increase the energy fee the commission made the fee 30 AMD. The government received additional 4 billion AMD for the budget by doing nothing. There is no need to give us headache by speaking about the reforms of the economic legislation and the efforts to improve the administration. The consumer will pay 96 AMD for 1 cubic meter of gas till April 1. Almost 16 AMD of this amount was the “part” of the government in the form of the VAT. After April 1 the picture will be more inspiring. The consumer will have to pay 132 AMD per cubic meter of gas. The VAT will amount to 22 AMD. So the budget will receive 6 AMD more from each cubic meter. It means that the population will have to pay to the government over 3 billion 300 million AMD. That is the reason why the government for years keeps unchanged the provision on the percentage of the VAT tax. This is the highest rate known to the economic science. Both developed and developing countries are trying to reduce this rate. The reduction of the rate means decrease of utility prices for the consumers and it relieves the tax burden for the entrepreneurs. This also becomes an additional source for the development of businesses. But on the other hand it stipulates reduction of revenues for the state budget. This will make the government conduct an active economic policy. It will have to start to search new sources and methods. But the government instead creates new tax types, which are pretty unexpected for the people. For example, the government threatens that the people, who hold domestic pets in the cities, will have to annually pay 5000 AMD. But it’s beyond the powers of the government to tax the ones, who live in luxury homes and have a collection of luxury cars. So it’s better to wait for the increase of utility prices.
