Explaining the Origin of the AMD 505 Billion Statement by the Prime Minister

The head of the State Revenue Committee, Davit Ananyan, clarified the origin of the AMD 505 billion statement made by Prime Minister Nikol Pashinyan during a session of the National Assembly.

He wrote in particular:

“Today in the National Assembly, the Prime Minister reiterated that the tax revenues of the state budget of the Republic of Armenia during 2018 and 2019 have increased by about AMD 505 billion (44 percent) compared to 2017. Once again, voices arose not only questioning the Prime Minister's statement but also some individuals felt it was their duty to express their ‘opinions’ and to share their ‘reflections’ with the public.

From a purely professional perspective, I deem it necessary to explain the origin of the AMD 505 billion mentioned by the Prime Minister.

I apologize in advance to the professional community for the explanation being somewhat 'simplistic' (not overloaded with economic and technical terminology), in order to be accessible to the broadest possible audience (including non-professionals).

Let's put it this way: The actual performance of tax revenues in the state budget for 2017 was AMD 1,158.0 billion. In 2018, it was AMD 1,258.1 billion, which means the increase in tax revenues in absolute terms compared to 2017 was AMD 100.1 billion (1,258.1-1,158). The actual performance of tax revenues in the state budget for 2019 was AMD 1,464.3 billion, which means the increase in tax revenues in 2019 compared to 2018 was AMD 206.2 billion (1,464.3-1,258.1).

Thus, the total increase in tax revenues in absolute terms from 2018 to 2019 compared to 2017 was only AMD 306.3 billion (100.1+206.2).

As of January 1, 2018, the debt owed to taxpayers amounted to AMD 275.7 billion (of which AMD 132.7 billion was overpayment collected from previous periods, and AMD 143 billion was debt from debit overpayments on VAT). As of January 1, 2020, the debt owed to taxpayers amounted to AMD 76.6 billion, meaning that the debt owed to taxpayers decreased by AMD 199.1 billion (275.7 - 76.6).

It is clear that the amount of debt owed to taxpayers has been written off from the generated (reported tax revenues declared by the SRC) tax revenues, thus reducing the actual performance indicators of the last.

It follows from the above that over two years (2018 and 2019), we succeeded in increasing the state budget's tax revenues in absolute terms by AMD 505.4 billion (306.3+199.1), part of which was allocated to settle the debts owed to taxpayers, while the other part increased the state budget's tax revenues. In percentage terms, the increase in revenues compared to 2017 is 43.6 percent (505.4/1,158.0).”