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Cancellation of Income Tax may be a Way to Strengthen the National Currency

In a situation when the International Monetary Fund (IMF) recommends the Government of Georgia either  to reduce budget expenditures or increase taxes, the businessman Koba Nakopia has initiated the abolition of the income tax.

According to him, this could be a way of strengthening the national currency.
“It is impossible to raise taxes in Georgia today, because under the constitution it requires a referendum. Moreover, most likely this issue will not be resolved even at the Parliament, since the majority of deputies in all fractions re against raising taxes. Moreover, the economy development needs alleviation of  the tax burden. In particular, in order the businesses to be able to reinvest their income, it is necessary the abolition of income tax. I can give an example of Estonia, where the business is free from paying income tax, but pay tax on dividends. When a business does not pay income tax but  a situation in the country is  normal, why not reinvest the released funds? This will be a very good incentive, which will improve the investment climate in Georgia,”- the businessman notes.

At the same time, he agreed with the recommendation of the IMF to reduce government spending.

“Costs should be minimized and maximum possibilities  to attract investors into the country should be found. A  growth of foreign investment is one of the ways  to stabilize the national currency ,”-  Koba Nakopia notes.

In his words, the country is facing serious challenges, as foreign currency earnings reduced, and most likely, this trend will continue this year, as the majority of countries remittances were received from are in a very difficult situation.

“We have to think about the growth of exports, moreover,  when the Association Agreement with the EU is already in force. It is necessary to increase exports to Europe and other countries where the economy is somehow stable. It is necessary to expedite the signing of a free trade agreement with the US, which will open up for us the US market as well,”- says the businessman.