A law enacted in Armenia in late 2016 allows the closest relatives of soldiers who die or become gravely disabled while on combat duty to receive 10 million drams ($20,000). Wounded soldiers suffering from less serious disabilities are eligible for 5 million drams in compensation.
In addition to these one-off payouts, the families of killed or maimed army officers, contract soldiers and conscripts receive monthly pensions ranging from 100,000 to 300,000 drams for 20 years.
The compensation scheme is be financed from a special fund to which every working Armenian has contributed 1,000 drams ($2) a month until now. The six-week war with Azerbaijan has drastically increased the number of people covered by the compensation scheme, forcing the current government to boost the fund’s revenues accordingly.
A government bill passed by the Armenian parliament in the first reading will significantly increase and diversify the fixed tax. Public and private sector employees will now pay from 1,500 drams to 15,000 drams depending on their monthly wages.
They will be divided into five income brackets that will determine the amount of their monthly contributions to the insurance fund. The minimum sum will be levied from people earning up to 100,000 drams a month, compared with 3,000 drams set for wages ranging from 101,000 to 200,000 drams. People making 1 million drams or more will pay the highest tax.
For their part, individual entrepreneurs will have to pay from 18,000 drams to 180,000 drams.
The parliament tentatively approved the bill even though some of its pro-government and opposition members described the quasi-proggressive tax as unfair.
In particular, Gevorg Papoyan of the ruling My Step bloc argued that citizens earning 201,000 drams will have to contribute 2.7 percent of their income to the insurance fund while only 0.85 percent of a monthly wage of 1 million drams will have to be deducted for the same purpose. He said the government should ease the financial burden on such citizens at the expense of high earners.
Another My Step deputy, Artak Manukian, similarly urged the government to introduce a new tax bracket for wages exceedings 2 million drams and collect 25,000 drams from them.
It was not immediately clear if the government will agree to make such changes before trying to push the bill through the parliament in the second and final reading.
Government officials said earlier that the state fund has already begun compensating participants of the recent war or their families.