The eleven parties/political alliances running in the December 9 snap parliamentary elections in Armenia have a variety of opinions regarding income tax policy and mandatory social security contributions, two economic issues that are being widely debated in the campaign.

Many are in favor of introducing a flat income tax, and it’s included in a bill amending the current income tax law.

The ARF has voiced its opposition to the flat tax. The Im Kayl (My Step) Alliance and the Lusavor Hayastan (Bright Armenia) party have come out in favor of the flat tax, adding that it should be decreased as time goes by.

Regarding mandatory social security contributions, the ARF and the Menk (We) alliance oppose the idea. My Step and Bright Armenia say they want to reform the pension system.

“We’ve opposed the mandatory aspect of the pension system since 2005. The system is risky and inept. The political forces have changed their positions,” ARF member Suren Parsyan, who is running for a seat in the new parliament, told Hetq.

Parsyan points out that the Yelk (Way Out) Alliance – comprised of the Civil Contract, Bright Armenia and the Republic parties – as late as 2017 opposed the mandatory contribution portion of the pension system and that now they merely want to reform it. 

“The government is guaranteeing that we will receive these amounts in full. Also, mandatory pension system will divert large sums from the state budget to the fund managers. Our government will receive loans from those fund managers. The inefficiency of this system has been revealed in other countries, Slovakia, Poland Argentina and Russia, who rejected it,” Parsyan said.

He believes that the June 2018 government bill to set the state’s contribution at 7.5% and the individual’s  contribution at 2.5% was a temporary resolution of the issue.

Babken Tounyan, an economics commentator running for parliament on the My Step ticket, says that the biggest mistake the government can make is to reject the mandatory pension system since there is no alternative.

“Our society is getting older, and when the ratio of working individuals and pensioners grows in favor of the latter, the only option to provide normal pensions is to raise taxes, which isn’t preferable,” Tounyan told Hetq, adding that it’s important that some of the resources being invested in by the fund managers must be invested in Armenia. He believes Armenia needs a fully operational stock market for this to happen.

Arkady Khachatryan, who is running for a parliament seat on the Bright Armenia ticket, says that the pension system will be managed by internationally respected fund managers, but that it can be fine-tuned once in operation.

He says that to allay the fears of many in Armenia that their contributions will disappear, ongoing discussions on specific points of concern will be needed.

The We Alliance (comprised of the Republic and Free Democrats parties) is in favor of making contributions to the pension system voluntary. Alliance representative Arayik Ayvazyan says citizens should contribute voluntarily, not obligated by the law.