The Armenian parliament approved on Wednesday a government proposal to sharply increase the presently modest taxes collected from homeowners.
A bill passed by the National Assembly in the first reading calls for particularly drastic increases in property taxes paid by rich or affluent Armenians.
The government wants to boost its property tax revenues, mainly channeled into local community budgets, by changing the methodology of calculating the value of apartments and houses. It is currently based on their cadastral valuation by a government agency. Under the government bill, the Cadaster Committee will determine it on the basis of their market price.
Presenting the bill to lawmakers, Deputy Finance Minister Arman Poghosian said the existing mechanism for taxation makes real state in Armenia “extremely undervalued.” He argued that proceeds from the property tax are currently equivalent to just 0.2 percent of Armenia’s Gross Domestic Product, compared with 1.1 percent in neighboring Georgia and 1.2 percent in Russia.
Deputies representing the opposition Bright Armenia Party (BHK) remained unconvinced, saying that the tax hikes would hit socially vulnerable families. One of them, Mande Tandilian, also deplored the fact that the bill is debated under a “special regime” allowing the government to push the bill through the parliament in the first and second readings within 24 hours.
“Do you find it normal that the owner of, for example, a 132-square-meter apartment in the town of Kapan pays no property tax while [an apartment owner] in Gavar pays only 440 drams (90 U.S. cents) or that only 9,000 drams ($19) is paid for a 120-square-meter apartment on Heratsi Street [in central Yerevan?]” countered Poghosian.
Some lawmakers from the ruling My Step bloc also voiced concerns about the measure. One of them, Suren Grigorian, said that many owners of Soviet-era apartments in downtown Yerevan inherited from their parents should not be made to pay as much as more affluent families.
Nevertheless, the parliament approved the bill by 74 votes to 14, with 2 abstentions.
The bill will gradually introduce a complex progressive scale of property taxation over the next four years. For example, the owners of small apartments worth an estimated 23 million drams ($48,000) will pay 18,000 drams, while ownership of larger properties that cost 58 million drams will translate into 108,000 drams in annual taxes.
Tax authorities will levy at least 326,000 drams from luxury apartments worth 100 million drams or more. The owners of large and expensive houses will have to pay even more.