The parliament is discussing the package of draft laws on taxes, which envisages to define new taxes.
The main goal of the draft law is to enable local government bodies to define and collect taxes in their administrative districts. The government is suggesting 5-6 types of taxes to be defined by community heads. The tax package includes property tax, hotel tax, parking and other taxes. People ask for money from drivers for parking their cars on streets and they say they are paying this money to municipalities. But in fact this money does not go anywhere. Now the government wants to legalize these payments. The hotel tax is a new type of taxing. It is logical that this draft law is to make the tax load on hotels heavier, but the regional administration deputy minister Vache Terteryan, who was the one who presented the draft law in the parliament, rejected this possibility. The deputy minister says the draft law makes only administrative changes. However, there is no information about the rates of taxes to be defined for each type of tax. According to Terteryan, it shall be defined after adopting the law. The deputy minister said he did not know what kind of financial inflows there would be after the adoption and application of the law. It is logical that the government should know what kind of financial inflows to expect as a result of adopting a new law on tax collection. For example, during the adoption of the tax package, which generated much noise last year, they said that they expected to collect 30 billion dram in 2010.
ARF faction member Artsvik Minasyan assures the goal of this draft law is to make the tax load heavier and collect more taxes. “The people who are allegedly saying the vice versa, either don’t understand the taxation system or are trying to escape from questions. I highly appreciate Mr. Terteryan’s professional experience and skills, but I think it is not his private initiative but an order of the system to centralize everything under their power and make their power stronger,” says A.Minasyan.
The government justifies this initiative by saying that they want to give more independence to municipalities. However, the MP assures that if these laws are adopted municipality leaders will be vulnerable. This is the main goal of the draft law. “On the one hand, community heads will have the right to define local taxes, and on the other hand will have to submit letters to courts to charge taxes all the time. If any community head does not want or is not able to go to courts, it will serve a ground to apply any kind of pressure against such people, even to the extent of getting a juridical conclusion from the Constitutional Court to fire officials. I think the goal of this draft law is to have such community heads who will be directly depend from the authorities and will be vulnerable in order to make the pressure on them harder and more effective. In addition, as a result of this law some communities may become poor and other selected communities may become richer. In a word, it may result in polarization,” says A.Minasyan.
This law will also serve a ground for reallocation of the property ownership right. If someone fails to pay taxes the community head will be eligible to apply to the court to confiscate this person’s property. A.Minasyan thinks this draft law is unconstitutional because according to the Armenian Constitution, taxes and duties shall be defined by the law. The contradiction is that according to this draft law, taxes shall be defined by communities after the adoption of the law.