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Tax increases on tobacco, imported cars and oil products

By Gvantsa Gabekhadze
Thursday, December 1
Georgia’s Prime Minister, Giorgi Kvirikashvili, has announced that the Government planned to carry out “radical changes” in order to ensure the country’s economic growth and the strengthning of the national currency, which has hit a historic low against the dollar.

At the first meeting of the new Government of Georgia confirmed after last month’s parliamentary elections, Kvirikashvili stated that excise tax on tobacco, imported cars and oil products would increase from the next year.

The PM claimed the change would help the state economy and would also provide positives for the environment.

Excise tax would be decreased for the import of hybrid cars by 60% and annulled for electronic cars.

Kvirikashvili also announced that to help the economy, the Government has already deceased salary financing for its subordinate organisations by 10% and administrative expenses were also decreased by the same rate.

The PM said the Government intended to increase tax for gambling businesses that would accumulate about 50 million GEL for the state budget annually.

Kvirikashvili stated that the Government of Georgia has held consultations with the National Bank of Georgia (NBG) on short and long-term steps in terms of the national currency. The Lari (GEL)continues to devaluate against the dollar, with one GEL amounting to 2.50 USD.

The PM said the Government and the National Bank’s short term step included easing the burden for Georgian citizens who had bank loans in dollars.

The action meant that those Georgian citizens who took loans in USD before January 1 2 with a rate of 2.30, could convert USD into GEL “ Kvirikashvili stated.

The PM also said that from January 1 2017, banks would be obliged to issue loans worth up to 100,000 GEL only in the national currency, while from 2018 the regulation would change and would expand to up to 200,000 GEL loans.

The PM stressed the steps aimed to popularise the national currency and decrease the Georgian people’s dependence on foreign currencies.

Kvirikashvili added that the Government also worked with the National Bank of Georgia companies operating in Georgia to announce prices on their products firstly in GEL and in case of wish, only after, indicate the price in other currencies.

“With the National Bank we also work on amendments to ban issuing of online loans as that is a public demand,” Kvirikashvili stated.

The United National Movement opposition and some analysts have criticized the Government, saying the Government’s intended steps would increase the burden on Georgians and wouldn’t help to stop the national currency devaluation.

“If taxes are increased, it means business would be under more pressure and prices for the local population will just increase,” Roman Gotsiridze from the United National Movement has stated.

Analyst Paata Sheshelidze says the “artificial interferences” won’t help the national currency devaluation, and could cause even worse consequences.