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Doubled Excise Tax for Alcohol against Local Production

From January 1 alcoholic beverages excisetaxes will be increased.

“Commersant” has found that excise tax rate per  1 liter of beer might become GEL 0.80 instead GEL 0.40. Apart from wine, excise price for all other types of alcoholic beverages will hike as well.
How this decision will affect domestic production, what is a position of  spirits producers in this regard,“Commersant” addressed this question to   several companies.

The MP Gogi Topadze says  that the issue of price rise in the excise tax on alcoholic beverages is included in the Parliament’s  agenda and  such a sharp increase in the excise tax can  harm local production.

“In Georgia, the purchasing power is very low. It will be a blow to domestic production. This hike will not increase revenues in the budget because no one will be able to  buy such expensive  drinks. Therefore, we will discuss, argue, debate  in Parliament. We’ll  demand to  lower excise price, in order  to  protectthe local manufacturer, “- Gogi Topadze notes.

Alcohol excise tax issue included in the agenda will be discussed in the committee on Wednesday or Thursday.

Zaza Tabagari, a consultant for strategic planning of Gomi, states that price of the company’s productswill  rise  just as much as the excise tax will  hike.  However, the price may rise even more, because the excise price is an integral part of the final product that can also lead to the VAT tax increase.

“People will continue to consume alcohol in the same amount, although the sales of products will drop. Alcohol users will prefer to buy relatively cheap drinks. In any country when the price goes up, the high-quality products sales fall. People switch  to low quality products until a new reality is  established, “-Zaza Tabagari points out.

According to David Nizharadze , Director of marketing and sales service of  Castel company, the company has not  outlined its position on  this issue yet. In his words, the market will  dictate prices. Nizharadze does not rule out that despite the excise tax rates increase, the price for their products will remain unchanged. However, the company will take the final decision after the new price is set.