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Levan Alapishvili

Alapishvili: Smuggling and Unemployment will Burst out after Growth in Tobacco Excise Tax

Lawyer Levan Alapishvili has commented on Government’s initiative for increasing tobacco excise tax and noted that smuggling risks will burst out in the country.

Alapishvili also recalled several samples of smuggling and told the BPI that the Authorities should prevent each of them.

“In not only our country, but all other countries, a certain percent of revenues may miss the state budget and be directed to the illegal sector. It is the government’s responsibility to reduce and prevent similar threats. To this end, the Government should apply administration leverages, create due legislative environment and business environment, economic conditions for stimulating tax payment. Therefore, the Government should envisage all risks of smuggling, even more so excise tax is expected to grow”, Alapishvili told the BPI.

Tobacco excise tax upturn may provoke firing employees in the business sector. Higher excise tax will cut revenues  and business companies will have to cut staff, Alapishvili noted.

All these factors will bring side affects too in terms of distribution, advertising, imports and so on. All these issues should be resolved in a complex way.

I will be happy if our government cares for these aspects and does not rely only on law enforcement bodies, because law enforcers cannot be always successful in this direction”, Alapishvili noted.

In response to the question whether smuggling prevention measures will need due money and revenues from higher excise tax may be directed to smuggling prevention, Alapishvili said:

“I do not think Government considers this issue in this light. The recent statements suggest that Government plans to fill the budget gap after profits tax reformation in 2017. This is not a good practice, because reforms should be clear and evident from the very beginning, they should be focused on specific directions and clear for our citizens. Reforms without public support are destined for failure.

For example, if the Government had explained that growth in excise tax on vehicles or property tax were to improve road infrastructure, our citizens would receive clear messages, but Government does not talk about this and therefore, I think the mobilized resources are to fill the state budget gaps”, Alapishvili concluded.