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Sheshelidze: Higher Tobacco Excise Tax Cannot Grow Budget Revenues, while Legal Market will Narrow

Government’s decision to increase tobacco excise tax in this volume will bring only negative results, Paata Sheshelidze, expert in economic issues, noted.

Excise tax growth by 60 Tetri will break all proportions, because the issue is of considerable financial resources. As a result, legal market will narrow, Sheshelidze said.

“This is unrealistic decision, because smokers consider tobacco products to be a staple good.

As a rule, it is not easy for smokers to give up smoking and they are expected to replace one variety of tobacco product by another, or buy tax-free baccy, instead of a pack of cigarettes.

If they realize that they kill themselves by smoking, they will find cheaper products to continue killing themselves. I do not smoke at all, I cannot even stand the smoke, but I suppose people will just choose cheaper alternative and continue killing themselves (if somebody thinks this is genuinely self-killing).

Growth in tobacco excise tax is useless, because quantity of smokers will decrease, but those who like smoking will find alternative ways to satisfy their addiction.

Ultimately, excise growth cannot grow budget revenues, while legal market will narrow and bribery scales will grow”, Sheshelidze said.

According to Government decision, starting January 1, 2017, excise tax on tobacco and tobacco products will rise by 60 Tetri. Meanwhile, new Minister of Finance Dimitri Kumsishvili noted that Government expects the smoking level in the country to drop by 10%.