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Cigarettes Getting more Expensive – 5-7% of Budget Revenues are Generated by Tobacco Industry

From  January 1, 2015, the excise tax on tobacco will rise again. By increasing tobacco price, the  state plans to reduce the number of smokers and tobacco importers are already  talking about the rise in the price of cigarettes.

Director of “Imperial Tobacco” in the Caucasus Irakli Nadareishvili says that  the increase in the excise tax on tobacco will always be reflected in retail prices. In his words,  the Ministry of Health explains this fact by concern  for the  citizens, however, revenues received from tobacco represent an important source for replenishing  the budget.

“5-7 percent of the budget revenues are generated by the tobacco industry,” – says Nadareishvili.

In addition, in response to the opinion that an increase in the price of tobacco will reduce the number of smokers, Nadareishvili brings a research conducted by the international research organization

According to the survey, in January-April 2014, tobacco sales in Georgia increased by 12 percent compared to the same period of the previous year.

According to him, an increase in the excise tax is associated with too many complex factors, including a sharp increase in excise that carries the risk of  an increase in smuggling and its influx from neighboring countries.

As Nadareishvili notes, a hike  in the excise tax increases  tobacco retail price, which could lead to smuggling of much cheaper but low-grade tobacco from  neighboring countries . “It will bring damage to the state,  legal business and customers” – says Nadareishvili.

According to Director of “GG 2011” (Gauloises, Davidoff and Camel)  Ilia Zhgenti,  an increase in the excise tax will result in a price increase in tobacco . He adds that a few months ago, when excise price rose for the first, their  company increased the price of tobacco by GEL 0.18.

Authorities say the gradual increase in the excise tax on tobacco is one of the recommendations of the UN Framework Convention on Tobacco Control.

The Chairman of the Committee on Health and Social Issues Dimitri  Khundaze states that  a situation is alarming  in terms of disease and mortality caused by tobacco use. In total 11 000 people die a year, 3 000 of them are  passive smokers. In his words, the tobacco excise tax has already increased, the second price hike  will happen  next year.

The Committee Chairman  has not  specified  how much  excise tax on tobacco may increase noting that the Ministry of Finance will count it.

The excise tax on cigarettes has increased on September 1, 2013.

At this point the filter cigarette excise tax amounts to  GEL  0.75, non-filtered –  GEL 0.20 and GEL 0.90for a cigar.