“Commersant” reports that from July 1, the government plans to introduce the ad valorem tax on tobacco and increase the excise tax on tobacco products, which will lead to an increase in cigarette prices by about 5%.
Raising excise taxes is part of the government program to fight against smoking, and according to the government officials, an increase in the price of tobacco products is the desire to limit the availability of cigarettes to the public and not the fiscal effect.
The introduction of the ad valorem tax is one of the commitments undertaken by Georgia at the signing of an Association Agreement with the EU.
The country is given the 5-year preparatory period, the interest rate of the tax is not specified, which is at the discretion of the state. In some European countries, such as Denmark and Sweden, the ad valorem tax is symbolic and doesn’t exceed 1%.
According to the MP from the ruling majority Gogi Topadze, Georgia must take into account the position of the EU, as the European integration is the benchmark for the country. As for the growth of excise, in his opinion, it is accepted norm in many countries.
Many countries increase an excise tax to reduce the consumption of cigarettes and alcohol. Correspondingly, an excise tax grows almost annually and it’s nothing special. In general, during the discussion of this issue in Parliament, I will insist on a minimum ad valorem tax, “- Topadze notes.