In protest against the increase in excise duties on beer, Georgian breweries launched a campaign “Do not make my beer more expensive.”
Representatives of the company “Natakhtari”, “Zedazeni” and “Castel- Georgia” discuss problems caused by an increase in the excise tax on beer.
According to them, a 50% increase in excise tax scheduled for March 1 will create a lot of tensions and will have a negative impact on production.
“There is no reason to appeal to the commitments made by Georgia to the European Union. According to the EU directives, the country is required to have the excise tax no less than 8.5 Euro per 100 liters of beer. But in Georgia this figure amounts to 18.5 Euro which is higher than in 12 countries of the European Union, including Germany and the Czech Republic “- the producers say.
What could be the negative effects of increased excise taxes? Brewers believe that the fiscal effect will be minimal, and will not compensate for the negative impact that will take place afterwards.
“We are talking about a large list of negative consequences – such as rising prices and, accordingly, reduced production, on this basis, unemployment will increase, revenues in form of various taxes in the budget will reduce – VAT, income tax, profit tax. The investment attractiveness of the industry is also expected to reduce as well as the overall business climate to be deteriorated,”- the businessmen say.
According to Levan Zautashvili, Director of “Castel – Georgia,” the short time given for the introduction of the new excise tax will also have a negative effect on the brewing industry.
“Parliament and the government informed us about the growth of excise taxes after we had already planned the budget for 2015. Meetings with businessmen began only after the bill had already been sent to Parliament,”- he notes.
According to the brewers, the best way out would be an excise tax increase depending on inflation processes.
“On the one hand, it will allow companies to gradually increase the amount of taxes received from the sector, on the other – will allow businesses to minimize the negative effects of the sharp rise in taxes, and give it an opportunity to develop,” – believe brewers.
They raise the question of the need for a special meeting with the Prime Minister, during which the head of government should be briefed regarding these issues.