The Armenian government pushed through the parliament on Thursday an amended version of a controversial law which it says will improve tax collection in the country.
The National Assembly passed the Tax Code in the second reading by 79 votes to 24 after the government amended it in a bid to address strong criticism of the legislation voiced by the Armenian opposition and some business associations.
The 800-page legislation called, among other things, for higher taxes on personal income, fuel, alcohol and tobacco when it was debated and approved by the parliament in the first reading in June. It was criticized not only by opposition but also some pro-government lawmakers. Several Armenian business associations added their voice to the criticism, saying that higher taxes would seriously hurt many businesses.
But the code was defended by the International Monetary Fund. A senior IMF official said later in June that it will pave the way for a badly needed increase in public spending and improve tax administration in Armenia.
Nevertheless, the government of then Prime Minister Hovik Abrahamian chose to make changes in the code before it was again debated by the parliament this week. In particular, it made sure that there are no rises in the rates of income tax collected from Armenians earning up to 280,000 drams ($590) per month. They make up the vast majority of the national workforce.
And payroll tax rates for higher wages will rise less significantly than was initially proposed by the government. The amended code will also keep unchanged the annual income ceiling for small businesses paying a single “turnover tax.” It is set at almost 58.4 million drams.
Khosrov Harutiunian, a pro-government parliamentarian, said these changes are the result of a “political compromise.” “That the document has been improved to the benefit of business is evident,” he said before the parliament’s second vote on the legislation.
The opposition minority in the parliament strongly disagreed, saying that the changes are not far-reaching enough. Naira Zohrabian of the Prosperous Armenia Party (BHK) claimed that the code will have “destructive” consequences for businesses if it is enforced by the authorities. Another BHK lawmaker, Mikael Melkumian, said the government should withdraw the bill and hold further discussions with its critics.
“I’m sure that many deputies have not even read the bill because they need a lot of time to do that,” said Heghine Bisharian, a deputy representing another opposition party, Orinats Yerkir.