The government is initiating tax amnesty. It is not a full amnesty but the debts of companies will be forgiven partially. There may be even pre-election purposes in this action, but if it is the case, businessmen do not lose anything.
This is not the first amnesty. In 2006 the government declared amnesty for private entrepreneurs that had debts. The problem was the fact that private entrepreneurs had collected a lot of debts because of the lack of knowledge on the law and their debts were growing. Meantime, most of the private entrepreneurs were pensioners who did not know the law and agreed to register companies in their names as their relatives asked them. The government enabled them to dissolve by forgiving their debts.
However, the confusion in the tax system did not finish with that as limited liability companies and closed joint stock companies still had that problem. This time the government has decided to compromise and forgive the debts instead of spending resources on clearance of companies that do not exist. According to deputy chief of the state tax income committee Armen Alaverdyan, approximately 40,000 companies do not pay taxes for a number of years and do not submit reports. As of January 1, 2010, the total amount of tax obligations failed to be paid by those companies was approximately 200 billion drams, 100 billion out of which was the net amount of the debt, and the rest was the penalties and interest rates.
Now the government annuls a part of the debt and lets the companies pay only the net debts, without the penalties and surcharges. The companies that have unresolved debts as of January 1, 2010, can apply to the tax bodies within the period of July 4 – August 20 and execute a timeline agreement for payments. Those companies that may fail to apply to the tax bodies for this purpose will have to deal with court proceedings. This initiative was fulfilled based on the law on organizations and private entrepreneurs and their obligatory payments adopted by the parliament in May 2010.
As a result of this initiative taxpayers will be free of their penalties. But in fact the state benefits more as the budget will be filled with new financial inflows and also the paperwork and administrative load will be eased. The state tax services will submit this list of companies to the state register office till July 15, which will have to inform the companies about the results within two months. If the companies fail to officially inform them about their willingness not to unregister and dissolve, they will be automatically taken out of state registration. “In 2012 only operating companies will be registered in the state registration service,” said A.Alaverdyan.
Certainly there is no guarantee that the situation will not repeat and in a couple of years the state will not have to declare another tax amnesty. Currently it is impossible to work without paying any taxes. Almost all businesses register their companies and the shady parts of their incomes are circulated within their legal companies. Despite the critics we should admit that the tax services are working more professionally now and even during the crisis they fulfilled their responsibilities. For example, during January-May months of 2011 totally 258.6 billion drams were transferred to the state budget as taxes and obligatory payments, which is more by 10.2% compared to the same period of 2010. This means that the tax growth has significantly exceeded the economic development rate. However, taxpayers have not started complaining of the tax services more than during the previous years. It means that the tax collection services are doing their job normally and without getting the nerves of taxpayers.
Of course people do not like the tax collection officers and it has been like that during all times in the history. But it is not the fault of tax collection officers only. “A citizen should pay taxes with the same feeling as a lover would give a flower to his/her lover,” said Novalis yet in the 18th century. People should understand that by paying taxes they are supporting the development of their country. If one loves his country, he should understand that this money is paid for the wealth of his family and friends. Many governments in the world have understood that it is impossible to collect taxes effectively with punishment tools and without the sense of understanding of taxes on part of taxpayers. In developed countries people think this way. Of course in those countries there are people who don’t pay taxes but the majority of their societies understand that they are the owners of their country and by paying taxes they make the government work.
Our government is using both administrative methods and also is trying to make people understand that paying taxes is not a bad thing. For example, the system of cash check drawing is based on the notion that “the beneficiaries are both the state and people”. Even more, once Tigran Sargsyan said concerning the cars with Georgian plate numbers that those drivers escaped from taxes and stole their money as hey were driving luxury cars without registration. However, for those drivers the state is the one that steals from them and they are trying to hide a part of their property.
The paradox is that on the one hand the state is trying to convince people to pay taxes, and on the other hand supports them not to pay taxes. For example, if as a result of the mentioned check drawing system ten people may be convinced to pay taxes, after the discovered cases on part of the state controller committee many normal taxpayers may change their mind and refuse to pay taxes anymore. How can a person be happy to give a part of his earning to the government if the officials of that government confess that, for example, Vazgen Khachikyan has embezzled the money of the government?
If they say that 40% of the economy is shady, it does not mean that these people are hiding the taxes, but it means that they simply do not trust the government. In the situation of such high level of mistrust to the state institutions on part of taxpayers the sector of tax collection cannot become better even if the officers of tax collection services become maximum professional in their work.