Armenia’s introduction of a mandatory income declaration system for all employed individuals in 2024, requiring filings by May 1, 2025, has sparked debate regarding its potential impact on both state revenue and citizen welfare. While the stated aim is to enhance fiscal transparency and bolster government income, concerns have arisen about the practical implications and financial burden placed on ordinary taxpayers.
The implementation of this system necessitates that citizens undertake several preliminary steps, each incurring associated costs. Obtaining an ID card, a prerequisite for the declaration process, involves a standard fee of 3,000 AMD for a 20-21 day issuance. However, the availability of expedited services, ranging from 8,000 AMD for a 5-day issuance to a substantial 23,000 AMD for a 1-day turnaround, introduces a tiered system that may disproportionately impact those facing urgent deadlines or lacking financial flexibility. The reported technical issues with the sole ID card printing device in the country further compound these concerns, potentially leading to delays and increased anxiety for citizens.
Beyond the ID card, securing a digital signature is another mandatory step, adding further financial strain. This requires a 500 AMD payment to link the signature to a SIM card at telecom offices, followed by a 3,000 AMD activation fee through Ekeng, Armenia’s electronic governance infrastructure provider. This cumulative cost of 6,500 AMD per individual represents a not insignificant expense, particularly for lower-income households.
The scale of this financial burden becomes apparent when considering the total number of affected individuals. With over 700,000 citizens required to file declarations, as confirmed by SRC Head Eduard Hakobyan, the aggregate preparatory cost could exceed 4.55 billion AMD (approximately 11.6 million USD). This substantial sum raises questions about the cost-benefit analysis of the new system, particularly when considering that these payments to telecom operators and Ekeng are themselves subject to taxation, potentially inflating the overall financial impact on citizens. The addition of terminal fees for processing payments further exacerbates this issue.
While the government anticipates generating billions in additional revenue through this mandatory declaration process, the question remains whether the system’s benefits outweigh the costs imposed on citizens. Critics argue that the system places a disproportionate burden on those already struggling with economic hardship. This raises concerns about the equity and fairness of the policy, particularly in a context where economic disparities persist.
The time investment required to complete the declaration process adds another layer of complexity. While a straightforward case might take 6-8 hours spread over several days, more complex situations, coupled with potential technical difficulties, could extend this to 15-20 hours or more. This time burden, particularly for those with limited digital literacy or complex financial situations, represents a significant opportunity cost.
The mandatory income declaration system in Armenia presents a complex policy challenge. While aiming to improve fiscal transparency and increase state revenue, its implementation carries significant financial and logistical implications for citizens. A thorough evaluation of the system’s long-term impact, considering both its benefits and costs, is crucial to ensure its effectiveness and fairness. This includes addressing the technical issues surrounding ID card issuance, streamlining the digital signature process, and providing adequate support and resources to citizens navigating the new system.