Armenia’s government offered on Thursday to extend interest-free loans to domestic owners of cars with foreign license plates who are unable to pay higher import taxes introduced recently.
The decision came after a series of angry protests staged by them in the country’s northern regions close to the Georgian border.
Under Armenian law, a car owner has to pay import duties and value-added taxes worth 32 percent of the market value of their imported vehicle in order to obtain Armenian license plates. Cars registered abroad until recently qualified as “temporary imports” and been exempted from these duties.
Many Armenians have long made use of this loophole by registering their cars with road police in Georgia, where import tax rates are considerably lower than in Armenia. The practice was especially widespread in the country’s northern regions bordering Georgia. It was also not uncommon among luxury car owners in Yerevan.
The government says the latter are the main target of the loophole’s abolition. According to the State Revenue Committee, more than 10 percent of some 430,000 vehicles driven in Armenians had foreign license plates as of late last year.
Dozens of motorists in the northern Shirak and Lori provinces have blocked roads and organized other protests since the measure took effect on February 5. Last week police in Shirak stopped a convoy of such cars from heading to Yerevan.
The protesters say they can not afford to pay hundreds and possibly thousands of dollars in additional taxes.
Speaking at a weekly cabinet meeting, Finance Minister Vache Gabrielian said that starting from Monday the owners of Georgian-registered cars worth up to 5 million drams ($13,700) will be able to receive interest-free loans from central and local government bodies.
Gabrielian said the loans will be repayable in six months and equivalent to the amount of taxes owed by the recipients. The cars will be used as collateral in loan agreements to be signed with them, he added.
Prime Minister Tigran Sarkisian suggested that up to 2,000 motorists could apply for such loans. Citing the State Revenue Committee, he also said that about 440 others have already re-registered their cars in Armenia.
One of the protesting drivers in Gyumri, who identified himself as Artur, dismissed the government concession as inadequate and said protests there might resume in the next few days. “What the government is offering us is totally different from what we are demanding,” he told RFE/RL’s Armenian service by phone.