Excise Crusade against Tobacco
05 September, 2013
Excise Crusade against Tobacco
Excise tax increased by 25% on both imported and locally produced tobacco products starting from September 1 as a part of anti-tobacco campaign launched by the Georgian government aimed at the reduction of tobacco impact on health and social welfare. Sector pundits expect more fiscal rather than health-related benefits and increased contraband risks to come on the way as a result of the excise crusade against tobacco that envisages more growth of excise tax on the tobacco product within five-year
period.
The excise increased by 5 -15 tetri on September 1 from 15 to 20 tetri and from 60 to 75 tetri for non-filter and filter cigarettes respectively. However, some supermarkets increased prices on a pack of cigarettes by 20 tetri almost a week ahead of actual excise growth. Some still maintain old prices until the old cigarette supplies are expired; however, they look forward to price-hike and expect that tobacco importers and producers will increase their wholesale prices as a consequence of the higher excise. Economic analysts believe that under any circumstances prices on tobacco products will increase in proportion to the excise growth rate as far as higher excise means higher expenses to businessmen and they always reimburse losses on the expense of consumers.
“Businessmen never face losses; they fill any gap between incomes and outlays through the consumers’ pockets,” Irakli Lekvinadze, an economic analyst said. He believes excise-rise cannot be an effective anti-tobacco remedy without complex anti-tobacco campaign that is absent in Georgia as yet and expects only one positive effect – at average 20% growth of the excise taxes in the state coffer. Regarding presumed health and social care benefits, he speaks negatively.
“Cigarette is a non-elastic product which is impossible to be replaced; so I do not expect that the number of smokers will shrink as a consequence of this excise growth. In Europe, when the excise increases on cigarettes, it envisages the purchase power of a consumer who is well-off and those who smoke expensive cigarettes, can afford to maintain their habit, for their income is high, while in Georgia mainly poor and socially unprotected people are smokers. They will go on cheaper non-quality products rather than quit smoking that will have the reverse effect [on their health and social being],” - Lekvinadze elaborated.
Nevertheless, Georgian government assures the excise increased for entirely health-care reasons not to secure bigger revenues in the state budget and expects no price hike on tobacco. Ministry of Finances of Georgia (MOF) informed in its official statement released on September the 1st, 2013, the excise rise is not linked with the unconventional retail price hike but depends on the market trend.
“The excise increase on tobacco product is in line with the complex approach of the Ministry of Labor, Health and Social Care of Georgia aimed at creating a long-term strategy of tobacco control in the country and reduction the tobacco-induced impact on health and social welfare. Moreover, excise increase is one of the tools to get the country closer to the regulations envisaged by the stricter framework of the tobacco control convention,” - the MOF statement reads. As a part of the anti-tobacco program government plans to prohibit smoking at public places as well as to increase excise furthermore within five years gradually, however does not disclose the rates of the planned growth at the moment. Meantime the best world practice shows that it is crucial to tobacco producing and importing companies to know expected excise growth rates in a long-run of 7-8 years at average, Nika Mchedlishvili, a Corporate Affairs and Communication Director of Japan Tobacco International, said in the interview to Georgian Journal. He expects no drop in sales [or incomes] as a result of the excise rise because the increased demand on cheaper segment will offset the shrinking sales of expensive high-quality product. But he is wary of contraband risks.
“Government should take into account the prices on tobacco region-wide. We all remember how the contraband rate increased to almost 70-80% in 2005 when the excise on tobacco doubled and cheaper Russian product infested Georgian market [through Georgian breakaway republic of Abkhazia],” - he said. “At the moment cigarette is much more expensive in Russia but risks may come from Armenia where a pack of cigarette cost 96 cent while it cost USD 1. 20 in Georgia before the excise rise.”
Print
Other Stories
Everything of comfortable life in one space – Second part of construction of one of the largest apartment complexes finished in Tbilisi
Apartment in ecologically clean environment, thousands of square meters of green yard, swimming pools, places for various sports activities, treks for walking and running, commercial spaces – all these available in one space is not a fantasy.
Batumi awarded Europe's Leading Emerging Tourism Destination 2019
World Travel Awards Europe Gala Ceremony 2019 took place on the 8th of June in Madeira, Portugal.
Coca Cola to open new factory in Georgia, will hire female drivers
Coca Cola is opening new factory in Georgia in December.
World's best party supply company now on the Georgian market
The largest party supply store in Georgia - MyDay is launching as the official distributor of AMSCAN from 2019.
Live as a marketing tool and an unprecedented live stream launched by Livetag
Sharing information has become smoother and more versatile in today’s technological world. Recently, live streaming, an online streaming media has become especially popular.
Theme and program of Caspian Energy Forum Tbilisi – 2019 changed
“The 8th International Caspian Energy Forum Tbilisi – 2019, scheduled for June 21, will focus on the development of the Azerbaijan-Georgia relations in the field of economy and energy”,
Misunderstanding over Poti deep sea ports
There was misunderstanding around deep sea ports in Georgia – in Poti.
High demand for dollars or the investment decline – Why Georgian Lari depreciates
$1 equals GEL 2,7470 in the official rate set by the National Bank of Georgia (NBG).
PSP Group confirms negotiations regarding purchasing of GEO Hospitals
PSP Group confirms negotiations regarding purchasing of GEO Hospitals.
New life to be given to Dashbashi Canyon
Georgia’s Agency of Protected Areas is planning to give new life to Dashbashi Canyon in Tsalka (southeastern Georgia).
Who is constructing “Khadori 3” Hydropower Plant in Pankisi Gorge?
Clashes broke out in Pankisi Gorge, Georgia’s northeastern region between special forces and residents
Business Positive – Successful radio program from Radio Positive
Starting point of radio program Business Positive is to meet interesting people, communicate with them and deliver information that is interesting for the audience.
A factory of electric vehicles to be built in Kutaisi
Prime Minister Mamuka Bakhtadze stated that a factory of electric vehicles will be built in Kutaisi at the presentation of the Aigroup business group.
Qvevri-shaped hotel complex to be built in Telavi
A Qvevri-shaped hotel complex is scheduled to be built in the village of Shalauri in Telavi, Kakheti (east part of Georgia).
Georgian designers presented at Fashion World Tokyo 2019
The products of 11 Georgian designers are showcased at Fashion World Tokyo 2019,
Silknet raises $200 million in Eurobond issue
27 March 2019 - JSC Silknet (“Silknet”), one of Georgia’s leading telecommunications operators, has successfully priced a debut $200 million 5-year 11% senior unsecured bonds issue (the “Notes”).
Pistachio trees will be planted in Georgia
Dozens of hectares of Pistachio are planned to be planted in Georgia this year.
Toyota Safety Sense and Hybrid Technology
Toyota Caucasus, has presented two new models the 5th generation RAV4 and the 12th generation Corolla at Rustavi International Motorpark, several days ago.
Bidzina Ivanishvili “became number one oppressor of businesses in Georgia” - ICC Georgia chairman Fady Asly
Mr. Ivanishvili promised the business community to protect them from harassment and pressure, unfortunately his words died with the sunset of that day
The best brands of Belarus will be exhibited on a large-scale exposition in Tbilisi
"The Belarusians like to come to Georgia to relax near the sea in Batumi as well as to stay in sunny Kakhetia."
Don’t treat business like a hooker! - Georgian businessman Vasil Soprpmadze addresses politicians
Businessman Vasil Sopromadze, founder of the company "Fresco", addresses politicians
RAV4 No Compromise and Corolla Set to Impress – Two New Cars Presented by Toyota
Toyota Caucasus, the company constantly aspiring to greatness, has presented two new models the 5th generation RAV4 and the 12th generation Corolla.
Mamuka Khazaradze quits TBC bank, does not sell the TBC Bank share
I made a decision to leave TBC bank where I spent 27 years of my life
10 Reasons to buy an apartment in the suburbs
There is a tendency for Tbilisi dwellers to move from central parts of the capital to the suburbs.
Georgian citizens are granted the right to work in France
The French Embassy in Georgia made remarks on granting Georgian citizens the right to work in France
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
16.07.2019
17.07.2019
USD
1
USD
2.8555
2.8555
EUR
1
EUR
3.2210
3.2210
GBP
1
GBP
3.5862
3.5862
RUB
100
RUB
4.5596
4.5596
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.8555
EUR
1
EUR
3.2210
GBP
1
GBP
3.5862
RUB
100
RUB
4.5596
July 2019
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31