Property tax administration and collection in Armenia

Abstract

Property tax administration and collection is one of the issues nowadays that needs study and attention of researchers and practitioners. This is an important issue in the Armenian fiscal policy since real property is a dynamically developing sector of economy with growing potential for taxation. Besides, property tax is one of the major sources of tax revenues for local governments. The purpose of this Master’s essay is to study property tax administration and collection in Armenia. It is worth to examine what are the perspectives of property tax base expansion and tax revenue growth in the context of dynamic real estate market and growing needs for improving municipal services. As the administration and collection procedure is implemented according to the law, the paper reviews the legal basis and its accordance with revealed tendencies. The essay deals with the issue of property taxation from different perspectives – legal framework, institutional framework in terms of government’s strategies and initiatives and fiscal perspective. The essay considers the international experience in the countries of Central and Eastern Europe and the current state of the problem in theory. The findings of the research are summarized in three subchapters. The first subchapter gives an overview of the historical background of property taxation in Armenia. As the Law on Self-Government of 2002 has delegated the responsibility of property and land tax collection from central government to municipalities it has also become a rather difficult task for communities, especially rural ones, to implement property tax administration and collection. Therefore, this subchapter focuses on the problems of property taxation from the legal and fiscal perspectives. The second subchapter focuses on the procedures of property tax administration and collection methods. Besides, it reveals the statistical data of property tax collection in Armenia in recent years which gives an opportunity to see whether there have been certain improvements in the sphere. The third subchapter analyzes the current status of the problem identified through the interviews with the representatives of the Ministry of Finance, State Tax Service, Armenian Local Government Program, Phase 3 and the Municipality of Vanadzor. Taking into account the major issues of the analysis the essay attempts to provide policy recommendations focusing on taxpaying culture and effective collection methods.