【世界银行】亚美尼亚公共财政评论：提高财政政策效率-2024.12_178页_6mb

Summary of the Armenia Public Finance Review (PFR II)

Core Content

This document presents the Armenia Public Finance Review II (PFR II), which focuses on enhancing the effectiveness, efficiency, and equity of the tax system and improving the equity and allocative and technical efficiencies of education spending. It is part of a broader effort to address key challenges identified in the Systematic Country Diagnostic (SCD) 2024, including vulnerability to shocks, limited market access, weak governance, and the need for better human capital development. The report includes detailed analyses, policy recommendations, and supporting methodologies from various experts and institutions.

Main Viewpoints

Tax System Analysis

• Tax to GDP Ratio: Armenia has a reasonable tax-to-GDP ratio that has increased from 21.2% (2014–2019) to 23.5% (2021–2023). The government aims to raise it to at least 25% by 2026.
• Direct vs. Indirect Taxes: Armenia collects more from direct taxes (especially Personal Income Tax (PIT)) than from indirect taxes (like VAT and excises). It has a heavier tax burden on labor compared to its peers.
• PIT vs. CIT: Armenia's PIT revenue is more than double its CIT revenue. The PIT collection is among the highest in the region and comparable to Estonia and Georgia.
• VAT and Excises: Armenia's VAT revenue is about 3 percentage points below the average of its peers. Excises (covering alcohol, fuel, and tobacco) account for between 1.5 and 2.0% of GDP, significantly lower than most peers.
• Environmental Taxes: Armenia introduced Environmental Taxes and Payments (ETPs) early, becoming the first in the Eastern Europe, Caucasus, and Central Asia (EECCA) region. ETP revenues were 0.9% of GDP over 2018–2022, and the share is growing.
• Tax Buoyancy: Armenia's long-term tax buoyancy is lower than its peers, indicating that tax revenues grow less than proportionally with GDP. This suggests a need for more responsive and dynamic tax policies.
• Tax Wedge and Informality: The tax wedge (the ratio between taxes paid by workers and the total labor cost for employers) is relatively high for low-income households in the formal market. This may be due to the combination of PIT burden and targeted social payments. Informality remains a challenge, with informal output accounting for a significant portion of GDP.
• Tax Equity: The Commitment to Equity (CEQ) approach and micro-level tax administration data indicate that horizontal and vertical equity are not fully achieved. Horizontal equity refers to similar taxpayers being taxed similarly, while vertical equity implies that those with higher ability to pay should bear a larger tax burden.

Education Spending Analysis

• Education Expenditure Trends: Public education spending has increased, but it remains below the average of its peers in terms of GDP and government expenditure share.
• Per-Student Expenditure: Per-student expenditure is low, especially in pre-primary and upper secondary education. It is also below the average of its peers.
• Efficiency Analysis: Using Data Envelopment Analysis (DEA), the report finds that Armenia's education system is inefficient compared to its peers. Allocative efficiency (resource allocation) and technical efficiency (use of resources) are both areas for improvement.
• Equity Considerations: Lorenz Curve and distributional analysis show that education expenditure is not equitable. There are significant regional disparities and inequalities in access to education.
• Learning Outcomes: TIMSS scores (math and science) indicate low performance and inequalities in learning outcomes by gender, location, and socioeconomic status.
• Education Reforms: The Five-Year Plan (2021–2026) includes reforms to improve curriculum, infrastructure, and links between education and labor markets. There is also a focus on teacher training, performance-based compensation, and improving the teaching profession to enhance learning outcomes.

Key Information

Tax System

• Tax Revenue Trends: Increased from 21.2% to 23.5% of GDP over the last decade, with a target of 25% by 2026.
• Tax Types: Includes PIT, CIT, VAT, excises, and environmental taxes.
• Tax Gaps: Exist in the tax system, particularly affecting informal sectors and small businesses.
• Carbon Tax: A total carbon price (TCP) is estimated, and the impact of raising carbon prices is analyzed. A reform package is proposed to improve formalization and GHG emissions.
• Reform Package: Includes measures to improve tax collection, reduce tax wedges, and increase the efficiency of public spending.

Education System

• Enrollment Rates: Gross enrollment rates are generally high, but net enrollment rates are lower, especially in pre-primary education.
• Teacher-Student Ratio: The student-teacher ratio is higher than in many peers, indicating potential inefficiencies in teacher allocation.
• School Size and Efficiency: School size and class size have a significant impact on education efficiency. Larger schools may be more efficient.
• Equity in Education: There are regional disparities in access and quality of education. Pre-primary education is particularly lacking due to limited availability of kindergartens.
• Curriculum and Infrastructure: The curriculum is outdated, and infrastructure is in need of modernization. The teaching profession requires enhancement through better training and compensation.
• Social Assistance: Social assistance programs need to be more targeted and inclusive to ensure equitable access to education and other services.

Policy Recommendations

Tax System

• Broaden the tax base to improve revenue collection.
• Introduce progressive tax structures to enhance equity.
• Improve tax administration to reduce informality and increase compliance.
• Implement carbon pricing mechanisms to support sustainable growth and climate goals.
• Enhance tax policy to improve competitiveness and economic stability.

Education Spending

• Improve allocative efficiency by better allocating resources to education.
• Increase technical efficiency by enhancing infrastructure and teacher training.
• Enhance equity through targeted social assistance and universal health insurance.
• Implement curriculum reforms to align with future labor market needs.
• Strengthen links between education and the labor market to improve relevance and outcomes.
• Increase public investment in pre-primary education and higher education.

Conclusion

This PFR II provides a comprehensive assessment of tax system efficiency, education spending, and fiscal policy effectiveness in Armenia. It emphasizes the need for reforms in both areas to support inclusive and sustainable growth. The tax system should be reformed to increase revenue, reduce informality, and improve equity. The education system should focus on efficiency, equity, and alignment with labor market needs. The report is a valuable resource for policymakers and stakeholders aiming to enhance public finance management and improve developmental outcomes in Armenia.