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New Armenian Tax Code Passed Amid Criticism


Armenia - Prime Minister Hovik Abrahamian and members of his cabinet attend a parliament debate in Yerevan, 13Jun2016.

Armenia - Prime Minister Hovik Abrahamian and members of his cabinet attend a parliament debate in Yerevan, 13Jun2016.

The Armenian parliament passed in the first reading on Wednesday a government-drafted comprehensive tax legislation strongly criticized by opposition parties and even some lawmakers loyal to President Serzh Sarkisian.

The new Tax Code is meant to both improve the notoriously arbitrary tax collection in Armenia and boost state revenue that has long accounted for a modest share of the country’s Gross Domestic Product.

The code calls for higher taxes on fuel, alcohol and tobacco. It also envisages increases in income taxes levied from workers earning between 120,000 and 2 million drams ($250-$4,150) per month.

Those workers make up a large part, if not the majority, of the national workforce. Their payroll tax rate is currently set at 26 percent.

Opposition lawmakers harshly criticized the 700-page government bill during heated parliamentary debates this week. They claimed that the higher taxes would seriously hurt many businesses and encourage tax evasion among them.

Some deputies representing the ruling Republican Party of Armenia (HHK) as well as the parliamentary faction of its junior coalition partner, the Armenian Revolutionary Federation (Dashnaktsutyun), also strongly objected to the proposed code. “We have serious concerns about the current version of the bill,” said Dashnaktsutyun’s Armen Rustamian.

But that was not enough to scuttle its passage. The National Assembly adopted the code by 68 votes to 21, with 18 abstentions.

Parliament majority leaders assured their concerned colleagues that the code may still undergo major changes before being debated in the second reading in September. Vartan Ayvazian, the chairman of the parliament committee on economic issues, said the government is open to amendments proposed by lawmakers and will hold a series of discussions with them starting from Wednesday.

Prime Minister Hovik Abrahamian gave similar assurances on Tuesday. “I have instructed the State Revenue Committee to discuss all reasonable proposals made by deputies and political forces,” he said.

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