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Importers of Tobacco Products Dissatisfied with a Level of Cooperation with the Authorities

Importers of tobacco products speak about  the lack of communication with the government, particularly in terms of excise tax hikes.

According to Director of “JTI- Caucasus” Ivane Kashia, an increase of excise duty by more than 0.10 GEL can cause a hike in price of  cigarettes.
“The increase in excise tax will hike a price of 1 pack of cigarettes by  0. 15 GEL . The higher the excise tax, the more expensive a product will be. The expensive products will lead to smuggling of tobacco products  – and it does not suit either the government or business. It would be nice if this issue is not resolved at the level of the Ministry of Health. Opinions of the Ministries of Finance and Economy should be taken into account in this issue, “- Kashia notes.

According to  a representative of  “Imperial Tobacco” Irakli Nadareishvili, an increase in  excise duties is always reflected in the cost of products.

“The Ministry of Health explains this step by the concern about the health of the population. However, on the other hand, taxes on cigarettes account for a large share of the budget of Georgia – about 5-7% . It is believed that the increase in the price of cigarettes reduces their consumption. In fact this is not so. In order regulations to  reduce the number of smokers, they should be focused on the factors because of which people smoke or start smoking. Numerous studies show that the regulations almost never lead to a decrease in popularity of smoking. Despite the increase in excise tax, sales of the company did not decrease, but even increased. According to the international research company “Nielsen”,  in September-December 2013 the sales of “Imperial Tobacco” in Georgia grew by 2% per month. With regard to the growth of excise as a whole, this issue should be resolved in the light of prices in neighboring markets, as if the difference is too large, it can stimulate smuggling in the country “- Irakli Nadareishvili notes.

In his words, the excise tax on tobacco is a complex issue, and its  increase poses  the risk of a sharp rise in smuggling.
Director of  “GG 2011” Ilya Zhgenti says  that the increase of excise duties will lead to an increase in direct proportion to the price of cigarettes.

“A few months ago, excise tax rose, and then, almost the next day price of cigarettes hiked. The same will happen now,  if the excise tax increases in price again, “-  the businessman notes.
From January 1, 2015 excise tax on cigarettes will rise once again – by rising cost of tobacco products, the government hopes to reduce the number of smokers,  the government says this is one of the recommendations of an international convention on tobacco control.

According to the Deputy Chairman of the Parliamentary Committee on Health Dmitry Khundadze, asituation in terms of mortality from diseases related to smoking is alarming in the country.

Excise tax on tobacco once has increased, another increase is planned in 2015,” – the MP adds.