As chairman of the Pennsylvania Senate Finance Committee, it’s not uncommon for Sen. Mike Brubaker (R-36th) to meet with experts on taxation and economic issues.
But hosting experts from the former Soviet nations of Moldova and Armenia? Well, that is a bit unusual. And as it turns out, rather enlightening.
For more than three weeks, Arsen Nikoghosyan of Yerevan, Armenia, and Veronica Vragaleva of Chisinau, Moldova, were special guests of Brubaker’s as part of the Legislative Fellows Program (LFP), a program sponsored by the U.S. State Department, Bureau of Educational and Cultural Affairs.
The program immersed Arsen and Veronica in state government, as they were able to observe Senate sessions in Harrisburg, watch the legislative process in action, meet with various legislative and finance leaders, and exchange ideas and insights with people from a wide range of backgrounds.
Arsen and Veronica were in Lititz Nov. 2 to tour the town and meet with some local constituents who asked a number of questions that ranged from curiosity about their home countries, to their thoughts on how government taxation and regulation protects — or inhibits — the interests of small business.
Arsen, 31, is deputy head for the Legal Department, State Revenue Committee, Republic of Armenia. It’s a country of three million people located to the east of Turkey, and is roughly one-third the size of Pennsylvania. He also studied law at Tufts University in Boston.
Veronica, 26, is a leading tax inspector for the Main State Tax Inspectorate of Moldova, a country of about 3.5 million people and slightly larger than Armenia in size, located between Romania and the Ukraine. This was her first visit to America.
“We are a developing country, still trying to understand democratic values, like elections,” Arsen said.
Armenia and Moldova both declared their independence from the Soviet Union in 1991; so while both are countries with ancient histories, politically their systems are still in their infancy.
One of the big challenges they face is collecting taxes from people who have found ways to hide their income from the government. In a country like Armenia, where the average salary is about $2,500/year and unemployment is “not low,” losing that income can put a strain of the government and the development of a solid infrastructure for citizens.
Veronica added that a large portion of their population, roughly 1.7 million people, are working abroad, which keeps the unemployment rate of Moldova comparatively low. While some tax is collected on that income from abroad, it still puts a lot of the tax burden on the people who work within the country, where salaries on average are low, but the cost of living can be relatively high.
“Money coming from abroad to families back home accounts for income that’s four-to-five times Moldova’s budget,” she said. “It is taxable income, but people find ways to get money to their family secretly, which can make it difficult to collect the taxes.”
As a result, they need to look at other ways to raise tax revenue or new ways to enforce those tax laws, which she says is often unfair to the citizens already paying their fair share.
Arsen said that tax laws in Armenia are less complicated than tax laws in the U.S., which helps with enforcement issues. He did say that he likes a more diversified tax structure like the U.S., where rates are adjusted and take various factors into consideration.
It was the one moment in the Lititz meeting where Arsen and Veronica expressed disagreement on their taxation positions. “I say you put up a rate, like 30 percent, and in my point of view it shouldn’t be diversified,” Veronica said. She added that the “cost of administration with a diversified system could be difficult and wipe out any revenue gains.”
Arsen said the one idea he will be taking back to Armenia is in the area of “good governess,” specifically with how he observed Sen. Brubaker and his staff operate.
“I want to take the principles of his management, share his views on government and use them to find the gaps in our system,” he said.
Veronica agreed. She said she was recently promoted to her current leadership position, and hopes to incorporate the “kind and professional” staff interaction she saw with Sen. Brubaker.
“I grabbed that way of management from you,” she said to him.
Both Fellows invited Sen. Brubaker to their home countries, and he confirmed that he has accepted their invitations and will visit them sometime between April and July of 2013. During his visit he will have an opportunity to view their government system similar to what he showed to Arsen and Veronica.
Veronica said one American idea she observed that she will propose back in Moldova is the creation of an independent checks and balances system within the financial industry as a way to assist with auditing beyond government regulations.
“We find that, sometimes, government doesn’t want to show it when something goes wrong,” she said.
While the Soviet government has been gone for over two decades, she said the heritage and some elements of that style of governance still exists. In some ways, that’s a benefit, she said, “so that we do not repeat the same problems.”
They also both enjoyed learning more about the history of Pennsylvania during their stay, visiting places like Gettysburg, and of course, Lititz.
“Lititz is very beautiful,” Arsen said. He also found the Amish way of life in Lancaster County very interesting, and how they are able to make it work in a modern society.
“Pennsylvania is the heart of American history,” Veronica added. She was surprised at first to see how many historical locations were in this area. “We can’t speak about U.S. history without speaking about Pennsylvania history as well.”
She said her trip here was “one of the greatest experiences of her life.”
Sen. Brubaker said his office reached out to the State Department to offer to host someone from the Fellowship, which annually provides up to 55 young professionals from seven nations in the Black Sea region of Europe and Asia, with an opportunity to gain close-up, practical experience in United States government.
“We were very fortunate that they gave us two very intelligent young professionals,” he said.
“There is often a misperception about Americans overseas,” Sen. Brubaker said. “I believe the best way to combat those perceptions is to be open, and invite dignitaries to see how we really operate, and hide nothing. At the same time, I get to see America through their eyes. Arsen and Veronica gave me a lot of healthy feedback.”