2024-12-16-世界银行-亚美尼亚公共财政评论_提高财政政策效率（英）_178页_6mb

Summary of the Armenia Public Finance Review (PFR II)

Core Content

This report, Armenia Public Finance Review II: Enhancing Fiscal Policy Efficiency, evaluates the effectiveness, efficiency, and equity of the tax system and public education spending in Armenia. It aims to inform fiscal policy improvements in key development areas identified in the Systematic Country Diagnostic (SCD) 2024, including vulnerability to shocks, access to markets, human capital quality, and governance. The report also explores the link between fiscal policy and sustainable growth, with a focus on environmental taxation and its implications for carbon pricing and emissions.

Main Views and Key Information

1. 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), with a target of 25% by 2026.
• Direct vs. Indirect Taxes: Armenia collects more from direct taxes (especially Personal Income Tax, PIT) than indirect taxes (VAT and excises), placing a heavier burden on labor.
  • PIT: Armenia collects more than double the revenue from PIT compared to CIT, with average rates higher than most peers and comparable to Estonia and Georgia.
  • VAT: Collects between 7–8% of GDP, which is ~3 percentage points lower than the average of its peers.
  • Excises: Collects between 1.5–2.0% of GDP, consistently lower than most peers.
• Environmental Taxes: Armenia was the first in the EECCA region to introduce environmental taxes and payments (ETPs), which accounted for 0.9% of GDP over 2018–2022, with a growing share.
• Tax Buoyancy: Long-term tax buoyancy in Armenia is lower than its peers, indicating that tax revenues do not increase proportionally with GDP growth.
• Tax Wedge: The average tax wedge for low-income households is relatively high due to the combined effect of PIT and targeted social payments, potentially discouraging formal labor participation.
• Informality and Taxation: There is a strong link between informality and the tax system, with informal output accounting for a significant share of GDP. The MIMIC model highlights the role of taxation in shaping informal economic activity.
• Equity Considerations: The Commitment to Equity (CEQ) approach reveals that tax burdens are not evenly distributed, with greater inequity in the distribution of tax burdens across income groups and sectors.

2. Education Spending Analysis

• Education Expenditure Trends: Public education spending in Armenia is relatively low compared to peers, with a focus on primary and secondary education. Private spending is also limited.
• Expenditure Efficiency:
  • Allocative Efficiency: The distribution of education spending across sectors and inputs is not optimal, with disparities in per-student expenditure and resource allocation.
  • Technical Efficiency: There are inefficiencies in the use of resources, with variations in school size, student-teacher ratio, and quality of teacher and principal inputs.
• Equity Issues:
  • Regional Disparities: There are significant differences in education access and quality between urban and rural areas, and across regions.
  • Socioeconomic Inequality: Access to pre-primary education is limited for low-income households, and disparities exist in learning outcomes by gender, location, and socioeconomic level.
  • Lorenz Curve: The distribution of education expenditure is highly unequal, with a Gini coefficient indicating substantial inequality.
• Education Outcomes:
  • TIMSS Scores: Mathematics and science scores for Armenian students have shown a decline over the past decade, suggesting a need for curriculum and teaching reforms.
  • Learning-Adjusted Years of Schooling (LAYS): This metric highlights the need for improvements in both the quantity and quality of education to enhance human capital.
• Policy Recommendations:
  • Improve the efficiency and equity of the tax system through base broadening, simplification, and better targeting of social payments.
  • Enhance the quality of education by modernizing the curriculum, improving teacher training, and increasing investment in infrastructure.
  • Increase public and private education spending to ensure equitable access and improve learning outcomes.
  • Implement performance-based teacher compensation to improve teaching effectiveness and student performance.
  • Explore the use of carbon pricing and environmental taxes to promote sustainable growth and reduce emissions.

Key Policy Recommendations

Tax System Reforms

• Broaden the tax base and simplify the tax code to reduce distortions and administrative burdens.
• Improve tax compliance and reduce tax gaps, especially in the informal sector.
• Enhance the equity of the tax system by adjusting the progressive tax schedule and reducing the tax wedge on low-income households.
• Introduce and expand environmental taxes to align with international climate policies and promote sustainable growth.

Education Sector Reforms

• Increase public education spending to meet international benchmarks.
• Improve the distribution of education resources to reduce regional and socioeconomic disparities.
• Strengthen the links between education and the labor market through curriculum reform and vocational training.
• Enhance the teaching profession through better recruitment, training, and performance-based incentives.
• Expand access to pre-primary education and improve the quality of early childhood education services.

Conclusion

The PFR II underscores the need for Armenia to improve the efficiency and equity of its tax system and education spending to support sustainable and inclusive growth. While the country has made progress in fiscal management and human capital development, further reforms are required to address structural inefficiencies, reduce informality, and enhance the quality of public services. The report provides a comprehensive roadmap for policy improvements, supported by detailed analysis and simulations, to ensure that public finances are used effectively to achieve development goals.