We Are Currently Paying Property Tax Very Unfairly: Sarhat Petrosyan

The former head of the Armenian Cadastre Committee and architect Sarhat Petrosyan has addressed discussions about the increase in property tax in a Facebook post. He particularly emphasized that currently we are paying property tax very unfairly: more for movable property than for immovable property, nearly the same for residential homes as for private houses, and almost under the same rationale for new and panel constructions, among others.

He wrote:

"Discussions about property tax, or more precisely, immovable property tax, are a sea of material for many researchers and policy developers in the field like me. However, there will still be opportunities to address issues like the classification of natives and non-natives or people resembling those in the Afrikaner house and Mashtots Park, who remain silent about Firduis and other similar subjects.

As a participant in the reform that serves as the basis for the aforementioned tax, and being an advocate for the review of property tax for over a decade, I would like to present a few considerations regarding the discussions of recent days. Although it is worth noting that each thematic layer of these discussions should be opened more in-depth and receive broader feedback:

1. Currently, we are paying property tax very unfairly: much more for movable property than for immovable property, almost equally for residential houses as for private houses, and so on. Moreover, we are still paying according to prices from 2003, when the “Caucasian tiger,” the subsequent “I-know” reforms, and the recent “economic revolution” had yet to manifest themselves. This undoubtedly needs to be revised, which was approached through cadastral valuations aligned with the market between 2018-2019.
2. I assert that the term "cadastral valuation" has been reintroduced, which was removed from circulation by the 2016 Tax Code. This addresses several other issues along with the question of prices differing from the market. The goal is to mitigate risks by keeping prices below the market at first and then integrating the issues I noted in the third point.
3. Taxes and fees (especially at the local level) are more important tools for community (or urban) planning and development than merely providing revenues. If we view them solely as a source to fill the universal treasury, we might find this unjust. However, this allows us to relieve the center of certain functions and develop another community or area, and it is hard to think of better tools for this than tax and fee policies.
4. I don't know if it was fortunate or unfortunate, but I have not been a participant in these reforms since a certain point; however, I believe there are several fundamental gaps that can still be addressed. In particular, I don’t know how sensible it was to promote this change in the pandemic without reviewing the concepts of threshold preservation and increase.
5. The example of the pensioner grandmother living in central Yerevan caused lengthy debates during discussions on the cadastral valuation law in the National Assembly. Of course, there was debate and discussion then, but lately, it seems there have not been any discussions in the National Assembly.
6. I agree that this fiscal logic can have both good and bad applications, which is likely in almost all initiatives. However, if we also view this as a tool for urban planning as I mentioned earlier, it will be possible to solve the Kond issue much more wisely than anticipated by various novice dilettantes of urban planning and architectural bureaucrats.
7. Finally, at first glance, the government made several gross errors related to communication. At the cabinet meeting, it was announced that immovable property taxes would increase several times (if I’m not mistaken, by 3.5), while it will increase by about 50% next year. Also, until now, there is no online calculator on official websites allowing people to understand their payable tax amounts.

As I assure you, if any “native” would discover that they are currently paying, for example, 3000 drams per month, but will pay 4500 drams next year and eventually 12000 drams in the long-term, they would probably display a bit more restraint.

I believe this, alongside many other opportunities like the pandemic, is a great opportunity to revise the public communication policy being conducted and perhaps reassess the value of public officials' words.

Finally, I kindly request that you go through the list of "natives" and see how several individuals listed there were nurtured over the last two years instead of finding themselves in the garbage. More on this perhaps next time."