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
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.”
Other Stories
Inovative and reliable online shop in Georgia - Momitane.ge
Status of Georgia as a business and tourism interesting country is growing from year to year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Bitcoin.com Head Speaker List featuring Circle, DEX.top and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23
TBC Bank and Gazelle Finance have teamed-up to support Medical City, a leading healthcare provider in the western region of Georgia to launch the Western Regional Center Of Modern Medical Technologies.
Equiavlent to buried treasure – resources that are underused in Georgia
For 2018 the IMF Commission has forecast an annual economic growth for the Georgian economy of about 5,5%.
Does the quality of Georgian wine increase and how the export affects it
If we look at the data collected about modern Georgian wine, we will find out that the Georgian wines produced between 2015-2017 are much better in terms of their quality and Oenologic features rather than the wines produced between 2009-2011.
Japan simplifies the visa requirements for Georgian citizens
Diplomatic and economic relations between Georgia and Japan are now moving to a new phase. Recently Japan has decided to simplify the visa requirements for Georgian citizens.
M&S (Marks and Spencer) and H&M collections to be produced in Georgia
Garments manufacturer MGMTEX will start production of the M&S and H&M trendy collections from this September.
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Exchange Rates
GEL Exchange Rate
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
November 2018
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