ON THE NEED TO TRANSITION TO A PROGRESSIVE INCOME TAX SYSTEM IN ARMENIA / О НЕОБХОДИМОСТИ ПЕРЕХОДA К ПРОГРЕССИВНОЙ СИСТЕМЕ ПОДОХОДНОГО НАЛОГА В АРМЕНИИ

Income tax, as a significant source of Armenia's state budget revenue, accounting for approximately 25% of tax receipts, currently requires revised approaches to its application rate. Since the implementation of the 2018 tax system, the approach has not fully met the principles of equitable taxation. Adjusting income tax rates has a direct impact not only on tax revenues but also on public sentiment, which ultimately affects the size of the shadow economy and undeclared income. This complex issue demands an optimized solution – identifying income tax rates that will ensure sufficient budget revenue while remaining acceptable for individuals. This study will focus on the analysis and modeling of projected budget inflows from income tax and will evaluate the effects of new tax rates on various population groups in the Republic of Armenia. The relevance of this work lies in the need to analyze proposed income tax rate changes. Given the adjustments to income tax rates, both since 2018 and potentially in the future, it is critical to conduct a comprehensive analysis of how income tax influences tax revenue, which constitutes over 90% of the state budget's income in Armenia.