After meeting with fierce resistance from lawmakers, the Armenian government has heavily watered down a controversial bill that would empower local self-government bodies to set and collect new taxes.
A package of corresponding amendments to three Armenian laws was submitted to the National Assembly early this month. It envisaged eight “local taxes” that could be introduced by the elected administrations of cities, towns and even villages across the country. In particular, they would be able to determine and levy extra duties from retail trade, incomplete construction sites and agricultural land not cultivated by farmers.
Local community budgets have until now been mostly filled with proceeds from regular land and real estate taxes. Their rates are determined by the central government and endorsed by the parliament, however.
The proposed amendments were strongly criticized by not only opposition lawmakers but also members of the parliament’s pro-government majority, including speaker Hovik Abrahamian. They dismissed government arguments that the amendments will strengthen local self-governance and said that a heavier tax burden would hurt the Armenian economy. The criticism forced the government to withdraw the bill.
A watered-down version of the bill was sent the National Assembly last week and approved by it in the first reading on Monday. Local governments will now be allowed to tax only hotels and parking lots located in their communities.
Abrahamian and other parliament majority leaders spoke out in favor of the bill, effectively predetermining the outcome of the vote. They argued that the government made sweeping changes in it.
Still, 20 deputies, most of them representing the opposition Armenian Revolutionary Federation (Dashnaktsutyun), voted against the measure. Vahan Hovannisian, the leader of Dashnaktsutyun’s parliamentary faction, said the fact that the government promptly dropped most of the tax proposals means that it is “not serious” about the matter. “We want to see a complete package,” he said.