Tobacco industry representatives introduced a 12-year plan to Government. Head of JTI Caucasus Communications Department Iva Khasia noted that this plan will protect the sector from risks, including prevent smuggling.
To prevent the growing smuggling volume, the government should grow excise tax due to the mentioned 12-year plan, Khasia said. Under this plan, excise tax should increase by 15-20 Tetri in 2017. Excise tax growth in previous years has not resulted in sales reduction, but the ratio of segment has changed and population has given preference to lower-quality cigarettes, Khasia said.
At the same time, higher prices provoked penetration of smuggled products to the market. To prevent similar risks in the future, the tobacco industry expects the government to enforce their 12-year excise growth plan.
It should be noted that after 2013, tobacco excise tax increased three times. The rate on filtered cigarettes rose to 1.1GEL from 0.60 GEL, while rate on non-filter cigarette increased to 30 Tetri from 15 Tetri.
On July 1, 2015 the so-called AdValue tax was introduced that currently makes up 10% of retail price of tobacco. In whole, excise tax growth increased tobacco products prices by 20-25%.
Tobacco industry representatives assert that the mentioned tax is administered incorrectly and this factor has made negative affect on companies and budget and consumers too.