The application of VAT in the field of education will lead to catastrophic consequences. Expert opinion

            The intention to apply VAT to educational institutions has caused serious concern among experts, institutions, and parents. They warn that if such a decision is made, the consequences will be devastating.

            It should be reminded that by the RA Prime Minister’s decision of December 30 “On approving the measures aimed at reducing the tax policy gap” in 2020, the government was instructed to Prepare an appropriate package of legislative changes by the second decade of May.

The appendix to the decision states as a justification that the privilege is used not only by the socially vulnerable but also by high-income groups, the latter more.

“In this respect, the VAT exemption privileges lose their address, they do not serve their main purpose,” the appendix reads.

What do the experts say?

State financial management expert Artak Kyurumyan is convinced that the government is showing a very technical approach to this issue without studying it in depth.

“Health and education services have always been exempt from VAT. The problem they are trying to solve in connection with the tax break will not solve the budget problems, especially in terms of education. I think it will have catastrophic consequences in the field of secondary and vocational primary education. This will have a significant impact on universities as well, ”says Kyurumyan. According to him, the possible change will lead to a reduction in the number of foreign students.

Haykaz Navasardyan, a member of the board of the “One Voice” Association, thinks that the drafters of the decision did not calculate the possible risks and damages well, especially with regard to private schools and kindergartens.

We must convince that this is not the best solution for Armenia

The Armenian Association of “One Voice” independent schools issued a statement, emphasizing that public education in Armenia is extremely endangered, if education is taxed with VAT, private schools will be in danger of closing.

The statement said that this decision will effectively destroy the vast majority of non-state schools that have many teachers with years of experience, and who is a key guarantee of education development.

“The biggest damage will be done to the education of the Republic of Armenia, the economy will suffer, the financial burden of the state will increase, thousands of employees of non-state schools will become unemployed, aggravating the social consequences of the current crisis.

The government’s move to close the budget gap by increasing the tax burden, if applied to non-public schools, will not only reduce state revenues but will lead to the collapse of an entire sector of the economy. Taking into account all this, we call on the Armenian government not to include non-state public educational institutions in the package of envisaged legislative changes,” the statement reads.

The executive director of the Armenian Association of “One Voice” independent schools Shamam Gorgyan does not rule out that such a decision may lead to emigration, besides, it deprives citizens of the opportunity for alternative education, causing serious social discontent among the society.

Full text in Armenian