By Ruzanna Khachatrian
The Armenian government was forced on Wednesday to withdraw from parliament its proposal to significantly toughen punishment for tax evasion which has been harshly criticized by many wealthy lawmakers.
The government pulled relevant amendments to Armenia’s Criminal Code out of a planned vote after realizing that it will not garner sufficient support in the National Assembly.
None of the parliament factions, including Prime Minister Andranik Markarian’s Republican Party (HHK), endorsed the proposed changes that would have allowed courts to sentence businesspeople convicted of hiding their earnings worth at least 10 million drams ($22,000) to between three and seven years’ imprisonment. The maximum punishment for such crimes now is a two-year prison sentence.
The draft amendments debated on Tuesday and Wednesday faced fierce criticism from many pro-establishment deputies, including parliament speaker Artur Baghdasarian. They said tougher sanctions would be open to government abuse.
“We risk causing very serious discontent among our businesspeople,” Baghdasarian said.
”The issue has a serious social significance. We could end up imprisoning a large number of businesspeople who create jobs.”
Wealthy businessmen holding parliament seats were particularly critical of the government proposal. “We all know that there is still no level playing field in the Republic of Armenia,” argued one of them, Khachatur Sukiasian.
Also against it were the assembly’s People’s Deputy group and the United Labor Party that are dominated by entrepreneurs. There are also many businessmen in the HHK and Orinats Yerkir factions. Sources said the HHK’s parliamentary leaders told the government late on Tuesday that the bill stands no chance of being passed.
The government is now expected to alter some of the bill’s provisions before reintroducing it to the National Assembly. One of the possible changes is to raise the threshold for criminally punishable tax offenses to 40 million drams.
Armenia’s Prosecutor-General Aghvan Hovsepian complained last summer that the existing sanctions against tax fraud are “absurdly soft” and must be revised. The resulting amendments were put forward in January at the start of a government crackdown on tax evasion.