Armenian Ministry of Finance opposes "health tax" proposed by  Ministry of Health

ArmInfo. The Ministry of Finance of Armenia is trying not to be sharp in its assessments, but, at the same time, proposes to be guided by a balanced approach. This  was stated by head of the department Atom Dzhandzhugazyan at a press  conference on December 7, spreading the negative position of the  country's financial authorities, in particular the Ministry of  Finance, regarding the "health tax" proposed by the Ministry of  Health.

According to him, it turns out that on the one hand the financial  authorities of the country declared their readiness to increase the  competitiveness of the republic, in particular by reducing income tax  and income tax, on the other hand, in fact, we create an additional  tax burden for business. "The logic of reducing direct taxes is aimed  at creating working capital for businesses for new investments,  generating new potential and generating additional results," the  minister said.

As the chief financier pointed out, despite the fact that many say  that the proposed "health tax" is an additional burden for the  employee, in fact, it will be borne by the country's economy.  According to the Minister, the same employee can invest the funds  available following the results of lowering the income tax in the  development of the capital market of Armenia and the formation of  additional potential in this direction.

As Dzhandzhugazyan emphasized, the majority of citizens are  dissatisfied with the project. When asked if the ministry of finance  has a preferred threshold for the health tax, the head of the  department replied: "The preferred threshold for the ministry of  finance is zero. The question is not in size, but in the direction."  Thus, according to Dzhandzhugazyan, the department is not sure that  the path proposed by the Ministry of Health will be painless and will  lead to the desired result. According to the head of the Ministry of  Finance, the issue requires additional study.

Earlier, ArmInfo reported that the Ministry of Health of Armenia  proposed starting from 2022 to "cut off" another 4-6% of the  employees' wages for medical insurance. The initiator of the document  posted the basics of the new "health care" tax on November 22 on the  single portal of legal documents e-draft.am.  According to the  rationale for the document, the development of the concept is due to  the need to ensure the availability of high-quality and timely  medical services for all citizens of the republic, regardless of  gender, age, place of residence and social status.

As the initiator of the project, Minister of Health Arsen Torosyan,  indicated earlier, allocations for the sector in 2020 will amount to  approximately 109 billion drams. Meanwhile, the calculations of the  Ministry of Health show that to solve the health issues of all  citizens of the country, an amount of approximately 250 billion drams  is required. it is these resources that the Ministry of Health wants  to "exhaust" by introducing a new tax.

According to the project, the cost of annual insurance coverage per  one beneficiary is 77 274 drams.  Compensation of expenses for  insurance coverage will be carried out from two main sources: total  revenues of the state budget and health tax. Regardless of belonging  to any group of the population, citizens who work and are  self-employed at the time of implementation will pay a health tax.

According to preliminary estimates by the Ministry of Health, the  "health tax" will not become an additional burden for more than 41%  of the working population (those who have a monthly income of 150  thousand drams or more). For the remaining 59% of employees, the  effect of the new type of tax, according to the authors of the  document, will be mitigated by the results of the introduction of a  flat tax scale. It is noteworthy that the authors of the concept of  the Navy, either intentionally mislead the reader, or by mistake,  declare that Armenia will switch to income tax at a rate of 20% as  early as 2021. And on the basis of this, they considered that for  those who receive a "minimum wage" the tax base will decrease by 4%,  and then "the establishment of a health tax of 4-6% will not have a  significant negative impact on the employee's income." In fact, if in  2022 a new tax is nevertheless introduced, the accountant will deduct  funds from the employees' salaries at the total rate according to the  following scheme: 21% income tax + 5% of payments under ONPS + 6%  health tax + payments to the Fund 1000 drams