Will the Refundable Income Tax Be Taxed? Deputy's Comments

Amid the decline in economic activity, the Armenian authorities are pursuing a policy of continuous increase in the tax burden. This was stated by Tadevos Avetisyan, a deputy from the 'Armenia' faction in the National Assembly, in an interview with Sputnik Armenia.

Earlier, Armenian media reported that the government is considering the possibility of taxing the refundable income tax directed towards the repayment of mortgage loans at 20%.

"The current government is exhibiting such initiatives not on a good day. We are observing a decline in economic activity since the external factors that contributed to economic growth are weakening. Tax revenues are decreasing; in the first half of the year, around 110 billion drams (approximately 282 million dollars) less was collected than planned. Accordingly, this government has adopted a policy of increasing taxes," emphasized the deputy.

He noted that this summer, the authorities have already raised the basic rate of turnover tax for small and medium-sized businesses twice (from 5% to 10%) and are now continuing to look for additional sources of tax revenue.

In his assessment, the Armenian government is trying to kill two birds with one stone: by limiting benefits, it restrains the implementation of the program. In other words, the authorities aim to first eliminate the refundable income tax system, and then intend to 'take away' part of the refunded tax, the media source's interviewee stated.

"First and foremost, this program was not initiated by them. It existed before they came to power, and now they are systematically reducing the appeal of the refundable income tax program by first limiting the geographical coverage and then reducing the tax benefits. If this continues, we will soon witness the closure of the program that has contributed to the flourishing of the housing sector. One of the main directions of the economy will be deprived of its main incentive, with all the ensuing consequences," Avetisyan believes.

According to him, the Armenian government is fully aware of the risks threatening the country’s economy and is striving to collect as many taxes as possible in all directions while also cutting budget expenditures, specifically concerning the refundable income tax. Previously, the targets were representatives of small and medium-sized businesses, and now the arrows have been directed towards the middle class, which could afford to buy housing through the refundable income tax program.

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