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AYFB: It is Inadmissible to Discuss Law on Tobacco in this Form

Association of Young Financiers and Businessmen (AYFB) expresses embarrassment  over the fact Parliament of Georgia plans to adopt Law on Tobacco in the existing form, without revision.

AYFB analyst Paata Bairakhtari noted that it is inadmissible to adopt the bill in the existing form.

«Seemingly, the Authorities cannot realize threats that may arise in case of adoption of the bill. First of all, the bill lacks for due financial analysis. Consequently, it is unclear what economic effect its adoption will bring.

Explored materials prove that we should not expect any economic benefit, while the bill does not enable to determine losses the state economy, budget and the whole country may receive.

There are a number of regulations in the bill of Tobacco Control and a reasonable time is required for their enactment. The clause of the bill that calls for licensing tobacco product traders is also unclear and nonfunctional. The existing bill introduces a licensing of tobacco traders, but the licensing mechanisms are not clarified, what criteria the applicant must satisfy, in general, what is the goal of introduction of this norm in the country.

If the Parliament adopts intricate  licensing norms, this signifies that a major part of small entrepreneurs will not be able to satisfy them (the issue is of supermarkets and stores) and they will be led to bankruptcy. As a result, only major entrepreneurs will be able to obtain licenses and will make benefits following extreme reduction of market competition. In the second case, if the licensing norms will be simple and everybody will be able to obtain them, introduction of similar regulations will be useless! This license will grow into mechanism for stealing money from population. As to growth in excise tax, through which the bill authors plan to reduce smoking level, this step will be inefficient and useless and the Georgian experience of the past years prove this consideration, along with international experience.

Over the past years tobacco excise tax is growing on permanent basis, but this mechanism has not reduced smoking level. Over the past years tobacco imports continuously grows in Georgia.

 According to statistics for January to June, 2016, Georgia imported 55.5 million USD cigarettes, up 3.5 million USD compared to the same period of 2015. An only result of tobacco excise tax growth has provoked upturn in tobacco products smuggling and endangered legal business’.

Thus, AYFB urges the Parliament to analyze all risks accompanying the bill adoption in the existing form and asks for making substantiated  revision or do not back adoption of this bill under the current form.