The understanding of luxury is very different in Armenia. However, the parliament is going to adopt a “law on luxury”. This law will regulate the hobbies of rich people. The initiator of the law, MP Viktor Dallakyan says rich parties at restaurants are luxurious too and should be taxed as well.
This law will serve for the social purposes as it is to tax expensive things and direct these resources on social programs. Last year during the worse time of the crisis a German businessman voluntarily recommended the government to raise the taxes to be paid to the government by big businesses, including his own business as well. High incomes are not the only reason for this honored decision because in order to be able to do such thing one should be well educated, have a good understanding about luxurious things love to the fatherland. This love to the fatherland is a result of understanding that they have been able to become rich due to their country, and they should not lose the human characteristics.
No businessman in our country has so far suggested to tax more from them. The businessmen, who have been able to work legally and collect wealth and money, did not succeed due to the help of the state. It is the vice versa; they have spent most of their time, nerves and other resources on defending their businesses and themselves from state institutions and officials. The state does not encourage the people who have new ideas and want to open new vacancies, but impedes their development as much as it can. Thus, no lawful businessman has the feeling of returning the debts or the favors of the state.
The rich people, who are oligarchs now, are cooperating with the state for a long time but when time comes to give a hand they just stay apart. If you want to see who are the businesspersons with whom the government wants to collaborate, you can read the list of MPs. Rich people and oligarchs are spending their resources on pre-election campaigns and supporting the government’s candidate to get indulgence. In other words, they are paying during elections to buy the right from the government to live in Armenia like in the paradise.
If the bill proposed by Viktor Dallakyan is adopted, high rank officials will have to pay some more taxes too. State officials spend most of the money they take as corruption or embezzled from the government on buying luxurious cars, shops, gifts, etc.
As the practice shows the state does not encourage to circulate the money in the economy. The economic elite are mainly made of people who are doing primitive business (there are a couple of exceptions). As a rule such group of people is spending their money on luxurious things, cars, apartments and pleasure. Even the richest people of the world who have billions due to their hard work and intellect are thinking of saving their resources too. Some of them even did not resist the crisis stress and committed suicide. In our country the difficult money such as money transfers, unpaid taxes, the money embezzled from the state are turning into luxurious cars, apartments, watches, restaurant parties and other pleasure.
If you go out to streets you will see many luxurious cars with repeating plate numbers and other things that require money. The expression of cheap taste and polarization in the society has no solution other than taxing extra money from the rich. In countries such as Armenia, which have such economic and political elite, the luxury tax may be effective, even though people may fail to pay this tax too as they are doing with other taxes as well. For example, an expensive product may be documented as bought by several people, thus giving them an opportunity to escape from taxes. However, in Armenia if the name of the law is “law on luxury” it may be considered a luxurious life to pay this tax too, thus it may work. In order to make the free resources be used optimally but not invested in real estate or luxurious things the name of the law should be changed. For example, it may be like “low on lack of taste, or how to intellectually spend your money”. In such case before buying a luxurious car the buyer will think whether he is doing a luxurious thing or lacks taste. I think it will make people change their minds to buy cars, otherwise it will describe their character.