ARMENIAN PARLIAMENT PASSES DRAFT LAW ‘ON EXCISE TAX’

ArmInfo
2009-02-26 12:31:00

ArmInfo. Today, the parliament of Armenia passed the second and final
reading of alterations to the Law ‘On Excise Tax’.

According to one of the document authors, MP Armen Ashotyan, only one
proposal was received to the second reading which has been adopted by
the authors of the draft law. The necessity of passing this document
has been stipulated for reduction of the excise tax to some excisable
goods. The problem is that as a result of alterations to the law on
December 26, 2008, which had to take effect started March 1, 2009,
the rates of excise tax to some import alcohol drinks, including beer,
vermouth and wine products considerably grew.

‘By our assessments, such development of events may cause sharp
reduction of import of these kinds of products, restrict the
competitiveness and, finally, lead to reduction of the budget revenue
as regards excise tax>, the reporter said. Moreover, sharp rise of
the excise tax rates will inevitably cause reduction of the import
olumes. In this situation, response measures by the states which
receive the Armenian products are not ruled out.

Moreover, reduction of the alcohol product import volume will not
contribute to enhancement of the local products’ quality because
of formation of unequal competitive environment, that will finally
lead to growth of prices for the local alcohol drinks. To avoid such
kinds of events, the authors of the draft law propose a differential
approach to solution of this problem, that is, support of the local
producer and account of the importers’ interests. According to the
draft law, it is offered to reduce the excise tax on the imported
beer from 120 drams per 1 liter to 105 drams, as well as reduce the
tax rate on other kinds of alcoholic products from 780 drams per 1
liter to 600 drams. Excise tax on the home-made alcoholic products
is fixed at 380 drams per 1 liter.

To recall, according to the new Law ‘On Excise Tax’, passed in
December, 2008, the rates of excise to the import alcoholic products
and ethyl alcohol were raised by 100% and 50% respectively. The
observers ascribed these alterations to the powerful lobbying by
vodka kings of Armenia, some of them are parliamentarians.

To recall, oppositional party voted ‘for’ the excise increase. As
Armenian parliamentarian from the Republican party faction of Armenia
Artak Davtyan told ArmInfo, the government of Armenia should promote
development of domestic production but not to the detriment of the
imported goods. He also said the alterations to the Law ‘On Excise
Tax’ should not create problems with the countries where the home-made
products are exported to. ‘First of all, we have certain liabilities
to the World Trade Organization according to which the maximum size
of the customs duty rate of 15% is fixed.

Moreover, the countries with which Armenia has close trade- economic
relations may apply the same sanctions with respect to the domestic
production, the MP emphasized. To note, ARF "Dashnaktsutyun" party
faction did not take part in the voting on this draft law.