The Armenian National Congress (ANC) Party urges the Government of the Republic of Armenia to refuse to make tax reforms or any similar reforms that are envisaged, are in no way substantiated and contradict the principles of the proclaimed economic policy. The political party has issued a statement in which it touches upon the draft amendments to the law on state duty.
The statement reads as follows:
“Small and medium businessmen, who have been holding protests since 7 March, are making legitimate demands to the government. On 7 March 2019, the Government of the Republic of Armenia approved the package of draft amendments to the Tax Code and to several laws regulating tax relations, but certain draft laws will cause harm to the activities of small and medium enterprises. Attaching importance to the need for reforms in this field, the Armenian National Congress will soon express its positions on and give its evaluations of the proposed package. However, for the time being, let us touch upon the bill on making amendments to the Law of the Republic of Armenia “On state duty” that is included in the package and has become publicly resonant (the bill particularly envisages essentially raising the state duty rates prescribed by licenses for performing activities in the financial-credit sector of the economy).
In this regard, the Armenian National Congress expresses the following concerns:
Liberalization of the market, promotion of free economic competition, improvement of the business climate
Implementation of the reforms envisaging increase of annual fees for organizing foreign currency trade and pawn shops by 60 times and the annual fees for credit organizations by 6 times will inevitably lead to the closure of a large part of nearly 220 foreign exchange bureaus and job cuts, as well as the elimination of an already weak competition, the closure of a large part of pawn shops providing accelerated and simplified services in the field of consumer loans, serious obstacles for credit organizations, and finally, rise of prices of services provided to clients and centralization of the credit market. What is also unacceptable is the steps aimed at cutting jobs in the private sector. The government’s policy was supposed to be aimed at solving the problem with unemployment in the country.
Issues on the development of small and medium enterprises
Foreign currency trade, pawn shops and credit organizations are classified in the field of small and medium entrepreneurship. Implementation of the aforementioned reforms will cause a blow to small and medium businesses and will go against the recently approved five-year Program of the Government of Armenia. This policy will also lead to deterioration of the Doing Business and SME Policy Index indicators of Armenia. For comparison, let us only state the fact that, for instance, in developed countries, the number of persons employed in small and medium enterprises exceeds 50% of the total number of employed persons (30% in Armenia), and SMEs have 50-55% of the GDP per capita (nearly 33% in Armenia).
The fact that the principles of economic policy are subordinate to fiscal goals casts doubts.
We recommend that the government launch discussions with all associations representing the financial-credit sector and other interested bodies before making the reforms.
With this example, the ANC urges the Government of the Republic of Armenia to refuse to make tax reforms or any similar reforms that are envisaged, are in no way substantiated and contradict the principles of the proclaimed economic policy."