Tax Policy Impact Analysis. The Armenian Case

Optimal management of a state budget is one of the cornerstones for every country on their path of prosperity. For most countries the major element of state income are taxes. The taxation allows redistributing income flows between different economic subjects within the country. Taxation models may differ from country to country. It depends on the particular economic structure of the particular state. For instance, some countries apply lower tax rates which allow them to have higher incomes for economics subjects, including firms and households. As a result, the government expenditures in the form of subsidies and direct transfer may decrease. The result may be a higher variance for income distribution between the populations. Another model, more socialistic one, looks totally different – higher taxes applied in the country result in higher social assistance from the government, which may cause equal social-economic structure. Thus, it is an object of analysis for every country what tax policy to apply. In addition, in long term, this policy may face some modifications. Therefore, it is very important to analyze how changes in that policy will affect the economy.