Before Hovik Abrahamyan’s becoming Prime Minister, during his predecessor Tigran Sargsyans’ tenure, rumors were circulating that the government is planning to make the funded mandatory pension contributions to a type of tax. After the Constitutional Court’s decision, the working group established by the Prime Minister of Armenia, Hovik Abrahamyan, as reported by “Pastinfon”, citing its sources, suggests defining a targeted social contribution instead of formerly funded. “What the government has presented as a preliminary version, the essence is the following, it is made a social contribution but they maintain the social insurance calculation rules for the mandatory, which does not mean that it turned into a type of tax or a social mandatory contribution, because by changing only the name, the essence cannot be left the same, the essence must be changed” said the ARF parliamentary faction MP Artsvik Minasyan, in the conversation with Aravot.am, referring to the government’s proposal.
According to Mr. Minasyan, it is not that it is made a type of tax and that’s it. There are deep problems, and if the Government is making changes, then it must put deep sense in them, rather than displaying a simplistic approach, as said by the MP. Mr. Minasyan said that currently discussions are underway in the government, but the ARF member believes that this version with formal amendment, which the government is trying to present, cannot be realized. “Everyone, in their turn, is stating some things, we are making it a type of tax, we are doing this, we are doing that, it is not dine like that, there should be a gist in everything, and the type of tax cannot be infinite. The core must be changed,” said Mr. Minasyan. To our question of how or specifically which section of the law should be amended, Mr. Minasyan responded, “The first important point is that the social contribution or the targeted funded contribution already exists in today’s common income tax. First, we need to make a distinction of which is the income tax and which is the social mandatory contribution., And today’s income tax should be surely divided, because the mandatory social contribution, or in the case the mandatory pension contribution, which merged under a common income tax, the economic and social nature of this one is different, and the essence of the income tax is quite different. Secondly, as recorded by the Constitutional Court, the employer should also participate in the mandatory pension contribution, in other words, the current system must not only separate the pension contribution from income tax, but should also consider the participation of the employer in accrual of pension contributions. The third key principle is that the social pension contribution cannot be some random number. It should provide a fair compensation to the pensioners for the future period. A steady state pension system, on the one hand, and a voluntary funded system, on the other hand. In short, there should be a clear public mandatory pension system and parallelly a pension system endowed with voluntary funded incentives system.” The other important principle, according to Mr. Minasyan, is the savings that can ensure economic growth and development throughout the country. And increase of pensioners’ living standards based on all of these. “This means that the entire system should promote voluntary savings, and we should not be limited to just wages of the employees, but the system should be such that in any event, people will be interested in volunteering to participate, pay these savings, and the savings will be used in our economy rather than be exported.” To the question of Aravot about what steps they will take if the clauses mentioned by the MP are not taken into account, Mr. Minasyan said, “The fight will continue, and as long as the mandatory component has not come out of our legislation, we will fight to the end.”
Nelly BABAYAN
