2014年-世界发展银行全球_Republic_of_Armenia_Public_Expenditure_Review___Expanding_the_Fiscal_Envelope_82页_3mb

Summary of Republic of Armenia Public Expenditure Review: Expanding the Fiscal Envelope

Core Content

This document presents a comprehensive Public Expenditure Review (PER) for the Republic of Armenia, focusing on expanding the fiscal envelope through reforms in tax policy, public expenditure efficiency, and the social protection system. It also evaluates the public sector remuneration system and outlines key policy recommendations.

Main Messages

Tax Expenditures

• Current Status: Armenia has granted 237 tax exemptions, allowances, credits, preferential tax rates, and tax deferrals, which result in significant revenue losses.
• Revenue Potential: Removing specific tax exemptions could increase revenue by about 1% of GDP. Examples include exemptions on corporate and income taxes on agricultural activities, tax on interest on government bonds, tax on dividends, and VAT on financial services.
• Recommendations:
  • Create a unit within the tax policy department to manage tax expenditures.
  • Develop capacity to estimate the revenue loss from tax expenditures, including a dedicated database.
  • Analyze the economic and social impact of tax expenditures with a focus on relevance, effectiveness, and efficiency.
  • Set a timetable for presenting tax expenditures in the annual state budget.
  • Eliminate open-ended tax reliefs and ensure all reliefs are time-bound.
  • Engage interested parties and the public to build support for the removal of tax privileges.

Fiscal Incidence

• Impact Analysis: The document uses household survey and administrative data to analyze how fiscal activities affect income distribution.
• Key Findings:
  • Taxes and transfers have a moderate impact on reducing inequality and poverty.
  • Direct taxes are progressive, while indirect taxes are slightly regressive.
  • Social expenditures like education and health are spread evenly, though coverage is not universal.
  • The Family Benefits Program (FBP) is one of the most targeted social expenditures, with a strong focus on the poor.
• Conclusion: While fiscal activities reduce inequality, the impact is limited due to the small size of the government's fiscal footprint. Greater redistribution would require more targeted and substantial expenditures, or increased direct taxation.

The Social Protection System

• Overview: The system includes the FBP, active labor market policies (ALMP), contributory pensions, and other smaller programs.
• Performance: The system performs fairly well in ensuring minimum living standards and promoting human capital accumulation and employment.
• Areas for Improvement:
  • Targeting: The FBP could be improved through proxy-means testing to better target the poor.
  • Childbirth Grant: The program's impact on fertility is uncertain, and possible disincentives for work should be further studied.
  • ALMP: These policies are in the right direction but may become costly if widely used.
• Conclusion: The system has significant room for improvement in terms of coverage and targeting, and should be streamlined for better efficiency and impact.

The Public Sector Remuneration System

• Overview: The wage bill and public employment are key factors in the quality and availability of public services.
• Current Challenges:
  • Despite an affordable wage bill, the public sector struggles with attracting and retaining skilled staff.
  • The current pay regimes are complex and lack systematic linkages, leading to inequities and inefficiencies.
  • Discretionary bonuses and lack of transparency raise concerns about fairness and performance incentives.
• Recommendations:
  • Simplify and harmonize the wage structure, starting with the civil service as a pilot.
  • Improve job descriptions and recruitment processes.
  • Strengthen performance appraisal systems.
  • Tailor training programs to better align with job requirements.
  • Develop better data systems to support fiscal impact simulations.

Key Information

• Fiscal Envelope: Armenia's government has a small fiscal envelope, limiting its ability to influence the economy through spending.
• Tax Revenue: Tax revenue improved by 3.2 percentage points of GDP from 2010 to 2013 due to reforms in tax administration and policy.
• Social Protection: The FBP is one of the most effective social protection programs in the world, with a strong focus on the poor.
• Public Sector Reforms: The government has started reforms to improve the public sector wage structure, but more work is needed to ensure efficiency, fairness, and competitiveness.

Main Views

• Fiscal Space: Expanding fiscal space can be achieved through better tax mobilization, reducing inefficient spending, and improving the effectiveness of public spending.
• Equity Considerations: Fiscal policies should aim for a balance between market efficiency and equity, particularly through targeted social expenditures and direct taxation.
• Political and Economic Context: Political preferences and economic conditions influence the design and implementation of fiscal policies, and cross-country comparisons are not always reliable guides.

Conclusion

The report highlights the importance of improving tax administration, reducing tax expenditures, and enhancing the efficiency and targeting of public spending. It also calls for reforms in the public sector remuneration system to attract and retain skilled personnel and ensure fair and effective compensation. These reforms are essential for reducing poverty, increasing shared prosperity, and improving the overall performance of the Armenian government's fiscal and social policies.